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ager 


ORY  control  is  epitomized  in  these  photographs.    Above  appears  Reuben  Hill,  factory  man- 
,  Detroit  Lubricator  Company,  whose  desk  is  a  focus  of  production  problems.  Below,  Richard 


„     ,  itor  Company,  whose  desk 

A.  Feisi,  general  manager,  the  Clothcraft  Shops,  is  studying  his  unique  production  schedule.       By 

tan  order  book  page  enlarged   to   blackboard  size,  President  Carpenter,  Fireproof 
ure  and  Construction  Company,  secures  cooperation  among  his  foremen 


SHAW  FACTORY  MANAGEMENT  SERIES 

EXECUTIVE 
CONTROL 


BUILDING  UP  YOUR  ORGANIZATION— ESTABLISH- 
ING STANDARD  PERFORMANCES— MANAGE- 
MENT DUTIES  AND   DIVISIONS 


A.  W.  SHAW  COMPANY 

CHICAGO  NEW  YORK 

LONDON 

1921 

40&33 


THE  SERIES:  BUILDINGS  AND  UPKEEP;  MACHINERY 
AND  EQUIPMENT;  MATERIALS  AND  SUPPLIES;  LABOR; 
OPERATION  AND  COSTS;  EXECUTIVE  CONTROL. 


Copyright  IV*.  by 
A.  W.  SHAW  COMPANY 

Entered  at  Stationers'  Hall,  London 

HUNTED  IH  TUB  UNITED  STATES  OF  AMEBICA 


\  55 

e  3£> 


« 


CONTENTS 


A 

' 


I-BUILDING  UP  THE  ORGANIZATION 

CHAPTEB  PAGE 

I    PROFIT— THE  FINAL  PROBLEM 11 

Analyzing  the  business  and  establishing  policies  (12) — How 
managers  adjust  quality  and  economy  (14) — Influence  of 
labor  on  investment  returns  (18) — Adjusting  the  administra- 
tive system  to  the  business  (21) — First  steps  in  reorgan- 
ization and  methods  of  standardizing  routine  (23) 

II    WORKING  OUT  AN  EFFECTIVE  ORGANIZATION      .        .        25 

Dealing  with  the  human  factor  (25)— Three  main  types  of 
organization  (27) — How  to  get  the  line  and  staff  to  cooperate 
(34) — Standardizing  the  one  best  way  under  functional  man- 
agement (36) — Taylor's  conception  of  control  (36) — The 
committee  form  of  management  (44) — How  one  company 
met  its  organization  problems  (47) 

III  THE  SELECTION  AND  TRAINING  OF  EXECUTIVES        .        48 

What  makes  a  100%  man  (48) — Building  an  effective  pro- 
motion system  (49) — Fitting  men  together  (51) — Picking  out 
foremen  (53) — Leadership  essentials  (54) — How  to  develop 
the  personality  of  the  house  (58) — Teamwork  through  shop 
meetings  (59) — Getting  men  to  look  ahead  of  their  jobs 
(60) — Outside  aids  in  filling  executive  positions  (62) 

IV  REORGANIZING  UNDER  SCIENTIFIC  MANAGEMENT     .        65 

Getting  a  viewpoint  on  reorganization  (65) — Taking  the 
factory's  measure  for  new  methods  of  work  (68) — "Breaking 
in"  the  first  department  under  the  new  method  (71) — Putting 
the  Taylor  system  on  a  permanent  basis  (76) 


II—  ESTABLISHING  STANDARD 
METHODS  OF  WORK 

HOW  TO  CODIFY  FACTORY  PRACTICE     ....        81 
Why  a  factory  code  is  necessary  (81)  —  Putting  standard  in- 
structions into  force  (82)  —  How  instructions  prevent  losses 
(86)  —  Two  ways  of  preparing  a  code  of  factory  practice  (88) 
—  How  to  avoid  antagonizing  workmen  (98) 


CONTENTS 


VI  PLANNING  AND  PREPARING  THE  ESSENTIAL  FORMS  .  9fl 
What  is  a  form  (96) — Eight  requirements  of  a  form  (96) — 
Developing  the  production  order  (98) — Size,  material  and 
contents  (102) — How  to  get  compactness  and  convenience 
(107) — Stocking  up  and  controlling  experimental  and  standard 
forms  (108) 

VII    ISSUING  AND  CONTROLLING  INSTRUCTIONS          .         .113 

How  to  handle  special  instructions  (114) — Caring  for  instruc- 
tion sheets  (115) — Initiating  the  new  workman  (116) — 
Controlling  general  rules  (118) — How  one  company  main- 
tains an  automatic  follow-up  on  factory  practice  (119) — 
"Verbal  instructions  don't  go"  (121) 


III— MANAGEMENT  DUTIES 
AND  DECISIONS 

VIII    KEEPING  THE  ORGANIZATION  EFFECTIVE    .        .        .125 

Maintaining  management  in  a  systematized  plant  (125) — 
How  super-inspection  holds  the  organization  up  to  standard 
(126) — Sifting  out  important  details  for  the  manager  (130) — 
Putting  retrenchment  on  a  stable  basis  (132) 

IX    HOW  THE  MANAGER  SETS  THE  PACE      ....       139 

What  the  manager  means  to  his  organization  (141) — Putting 
plans  into  action  (141) — How  the  chief  should  spend  his  time 
(142)— Meeting  workmen,  trade  and  public  (147) 

X    FITTING  THE  FACTORY  TO  ITS  TRADE  ....       149 

How  products  change  in  popularity  (150) — Setting  gages  for 
show  the  drift  of  trade  (154) — Revising  production  to 
611  new  wants  (156) — How  distribution  has  affected  manu- 
facturing (160) — A  forty-year  perspective  on  a  nation-wide 
trade  (169) — How  a  business  put  itself  in  line  with 
demand  (171) 

XI    EMERGENCIES— THE  CRUCIAL  TEST        ....       172 

How  to  insure  against  emergencies  (173) — Grounding  a  busi- 
ness to  withstand  a  crisis  (174) — Testing  a  manager's  resource- 
fulness (177) — How  one  executive  devised  follow-uo  methods 
to  meet  a  production  crisis  (179) — Changing  an  emergency 
into  an  opportunity  (184) 

XII    KEEPING  MANAGEMENT  POLICIES  HEALTHY        .         .       186 

Quality-service  and  cost  must  govern  detail  policies  (188) 
— How  traditions  may  cripple  an  organization  (188) — What 
determines  the  life  of  the  business  (190) — Increasing  output 
four  and  a  half  times  (191) — Putting  a  master  policy  into 
force  (196) — Honest  criticism  as  an  essential  to  sustained 
progress  (197) 

INDEX  203 


CONTENTS 


PLATES 

How  the  Manager  Controls  Operation Frontispiece 

Battlefields  of  Business         .         .         .         .         .'  19, 20, 37, 55, 73, 200 

Working  Out  the  Organization      .          ...         .         .         .         .         37 

Inside  a  Factory  Conning  Tower  .          .         .         .....         38 

Building  Business  through  Committee  Control        .         .    •     •         .      55,  56,  73 
Future  Executives  in  the  Making  .......         56 

Planning  to  Bring  Customers'Back 73 

Making  Management  Problems  Graphic        ......         74 

A  Graphic  Record  of  Ideas,  Plans,  Work  and  Supervision         ...         91 

Following  Orders  with  Wooden  Blocks .'92 

Putting  the  Product  through  the  Service  Test 109 

Making  Power  the  By-Product  of  Inspection  .         .         .         .         .110 

Computing  Prospective  Business  .......        127,  128 

Progress  Charts  for  Keeping  Tab  on  Work 145,  146 

Finding  the  Product  That  Meets  the  Demand         .         .  163,  164,  181,  182 

How  Edison  Met  a  Crucial  Test 199 

Making  Sure  of  Demand  for  the  Product 200 

FORMS 

I     Making  an  Envelope  Do  Double  Duty 103 

II  How  to  Arrange  Space  and  Data  on  a  Form      ....  105 

III-IV     Developing  a  More  Efficient  Report 106 

V    A  Label  That  Guards  Instructions 117 

VI    An  "Automatic"  Follow-up  Card 119 

FIGURES 

I  Analyzing  the  Duties  of  Management        .....  13 

II  Considerations  behind  Sound  Policies        .....  15 

III  Fitting  Quality-Service  and  Cost  to  Demand     ....  16 

IV  How  the  Manager  Supplements  His  Abilities     ....  27 

V  Essentials  in  Building  an  Organization      .....  28 

VI  Line  Organization  in  an  Early  Stage          .....  29 

VII  How  Functional  Management  Developed           ....  83 

VIII  Emerson's  Twelve  Principles  of  Efficiency           ....  84 

IX    Installing  More  Scientific  Methods 85 

X  Planning  and  Executing  Work           ......  40 

XI  How  One  Company  Divides  Its  Activities          ....  43 

XII  How  the  Franklin  Automobile  Company  Is  Organized         .          .  44,  45 

XIII  How  Eight  Executives  Select  Men 50 

XIV  Qualities  Required  in  an  Executive  .          .         .         .         .  51 
XV    How  to  Handle  an  Executive  Meeting 61 

XVI  Reorganizing  under  the  Taylor  System 67 

XVII  How  to  Codify  Standard  Practice 83 

XVIII  Distribution  of  Instructions 87 

XIX  Division  of  Instructions          .......  87 


CONTENTS 


XX-XXI  Typical  Subjects  in  a  File  of  Standard  Instructions           .  89,  90 

XXII  Listing  Foremen's  Duties       .         .         .        *     .   .         .        94 

XXIH  What  Forms  Are  Necessary  in  the  Factory      ...        99 

XXIV  Adopting  a  Fixed  Policy  toward  Maintenance           .          .       131 

XXV  How  a  Store  Standardized  Retrenchment          .         .          .135 

XXVI  Sizing  Up  the  Manager's  Job          .         .         .         .         .       140 

XXVII-VHI  Doubling  Personal  Efficiency          ....         142,  143 

XXIX  How  One  Business  Was  Saved  from  Failure     .         .         .151 

XXX    How  a  Trade  Idea  Grows 153 

XXXI    Fitting  the  Factory  to  the  Trade 157 

XXXII  Finding  the  Grade  of  Product  That  Pays  Best          .         .       161 

XXXIII-IV  Forty  Years'  Perspective  on  One  Business        .         .         166-167 

XXXV  What  the  Manager  Can  Do  about  Emergencies        .         .       175 

XXXVI    Building  Up  Good  Will 189 

XXXVII    How  to  Consider  a  Business  Problem 191 

XXXVIII    How  to  Perfect  an  Organization 193 


Part  I 

BUILDING  UP 
THE  ORGANIZATION 


AUTHORITIES  AND  SOURCES 
FOR  PART  I 


Chapter  I.  Contributed  by  Mr.  Feiker.  The  general  point 
of  view  corresponds  to  that  taken  by  A.  W.  Shaw  in  his  book, 
"An  Approach  to  Business  Problems,"  which  in  turn  is  a  state- 
ment of  the  editorial  viewpoint  of  the  A.  W.  Shaw  Company 
on  management.  Illustrative  material  has  been  drawn  from 
discussions  and  correspondence  with  many  manufacturers,  end 
the  chapter  is  a  composite  of  their  several  policies  as  the  writer 
interprets  them.  Many  of  the  companies  referred  to  could  not 
be  named  without  violating  a  confidence.  Concerns  in  the 
following  lines,  however,  are  among  those  to  which  reference  is 
made:  electrical  manufacturers  (the  General  Electric  Company 
and  a  concern  in  the  Middle  West),  automobile  manufacturers, 
an  implement  manufacturer,  a  piano  factory,  a  navy  yard,  and 
several  metal-working  factories  in  America  and  abroad. 

Chapter  II.  Also  contributed  by  Mr.  Feiker  in  collaboration 
with  Mr.  Murphy  and  Mr.  Porter,  and  in  counsel  with  various 
industrial  engineers  who  hold  advanced  positions  in  the  develop- 
ment of  organizations.  Among  the  concerns,  authorities  and  lines 
to  which  reference  is  made  are  the  National  Cash  Register  Com- 
pany, the  Union  Pacific  and  Southern  Pacific  Railways,  Franklin 
Automobile  Company,  the  work  of  Frederick  W.  Taylor  and 
Harrington  Emerson,  the  machine-tool  industry,  a  manufacturer 
of  electrical  devices,  and  others. 

Chapter  III.  Contributed  by  Mr.  Feiker  in  collaboration 
with  Mr.  Porter.  Because  of  the  elementary  stage  in  which  the 
training  and  development  of  executives  still  remains,  the  ma- 
terial has  necessarily  been  gathered  widely  from  many  com- 
panies. A  few  of  the  plants  and  lines  from  which  points  are 
drawn  are  the  manufacture  of  office  appliances,  sanitary  ware, 
cutlery,  agricultural  machinery,  metal  furniture  and  electrical 
equipment,  publishing,  the  American  Telephone  and  Telegraph 
Company,  and  the  University  of  Cincinnati. 

Chapter  IV.  Contributed  by  C.  Bertrand  Thompson, 
lecturer  on  manufacturing  at  Harvard  University,  from  his  own 
study  and  practical  experience  in  various  installations  of  the 
Taylor  system. 


I 


PROFIT— THE  FINAL 
PROBLEM 


IDEAS  eventually  determine  the  growth  and  success  of  any 
enterprise.  But  ideas  may  also  cripple  a  business.  Every 
concern  has  what  may  be  called  a  rate  of  flow.  If  the  busi- 
ness is  too  rapidly  supplied  with  new  impulses,  the  whole 
machinery  for  turning  out  the  product  clogs  and  stops.  It  is 
no  secret  that  one  old  established  business  is  just  recovering 
from  an  influx  of  ideas.  The  man  who  had  charge  lived  too 
far  ahead  of  the  practical  routine  of  his  trade.  His  ideas  were 
splendid  but  he  tried  to  get  them  all  started  at  once.  He  over- 
financed,  over-developed  and  over-managed  his  business  and  the 
result  was  a  catastrophe.  His  ideas  had  choked  the  enterprise. 

Balance  is  the  master  quality  in  a  profit-making  business.  No 
enterprise  can  run  at  a  profit  unless  the  man  at  the  head 
realizes  his  responsibility  and  establishes  a  balance  between  cost, 
quality  and  service  for  his  conditions.  The  need  for  men  with 
the  balanced  viewpoint  is  seen  in  large  businesses  and  small. 
Every  idea  calls  for  the  profit  test — and  the  application  of 
untried  ideas  requires  caution,  in  order  not  to  overthrow  the 
balance  upon  which  the  momentum  of  the  enterprise  depends. 
"What  is  essential,  where  to  begin,  how  a  change  at  one  point 
will  alter  the  other  relations  of  the  business,  are  the  questions 
with  which  the  manager  is  most  concerned.  The  advertising 
manager  whose  first  thought  is  for  an  impressive  letterhead  with 
his  name  on  it,  has  the  same  wrong  perspective  on  his  particular 
work  as  the  head  of  a  public  service  corporation  who  clings  to 
the  old  doctrine  that  consigns  the  public  to  the  lower  world. 
To  maintain  the  balance  between  cost,  quality  and  service  is  the 


12 ORGANIZING  FOR  PRODUCTION 

real  work  of  the  man,  whatever  his  title,  who  directs  the  policies 
of  a  business  or  its  producing  departments. 

This  simple  approach  to  the  general  manager's  problem  seems 
particularly  necessary  in  the  manufacturing  business.  So  many 
important  changes  and  so  many  new  factors  have  been  intro- 
duced into  the  production  of  commodities  that  it  is  easy  to  become 
confused  and  to  mistake  some  side  problem  for  the  main  one. 
A  man  goes  into  a  business  with  the  expectation  of  making  a 
profit  for  himself.  To  be  successful  he  must  produce  and  dis- 
tribute his  particular  commodity  so  as  to  earn  a  profit  above 
all  manufacturing  and  distributing  costs.  Profits  are  the  test 
of  a  successful  manufacturing  program.  Fine  buildings,  modern 
machinery,  precise  methods,  a  splendid  organization,  in  them- 
selves are  essential;  but  they  are  all  simply  means  to  an  end. 
If  with  them  a  manufacturer  can  not  produce  a  product  attract- 
ive enough  in  quality  and  service  so  that  his  customers  will 
exchange  for  it  money  enough  to  make  him  a  profit,  he  has 
earned  neither  the  title  nor  the  rewards  of  ar  sound  manager. 

HOW  TO  ANALYZE  A  MANUFACTURING  PROPOSITION  AND  ESTABLISH 
FUNDAMENTAL  POLICIES 

TTHE  activities  of  a  manufacturing  business  may  be  divided 
into  three  broad  groups — production,  distribution  and 
administration  (Figure  I).  Starting  with  the  purchased  raw 
materials  for  a  product,  the  activities  of  production  have  to  do 
with  changes  in  its  form.  Distribution  similarly  deals  with 
changes  in  place  or  location  and  administration  concerns  itself 
with  all  those  activities  of  a  business  which  facilitate  these 
changes  of  form  and  of  place. 

Whoever  lays  down  the  policies  of  a  manufacturing  business 
today  should  occupy  a  position  above  these  three  groups  of  activi- 
ties internal  to  the  business,  and  by  establishing  a  proper  balance 
between  cost,  quality  and  service,  should  enable  it  to  prosper 
in  its  external  relations — its  contacts  with  customers,  competitors, 
public  opinion,  law  and  government. 

When  a  general  manager  can  see  this  as  his  relation  to  the 
enterprise,  he  is  in  a  position  to  give  proper  weight  to  the  various 
internal  and  external  considerations  and  to  establish  wise  policies 


APPLYING  THE  PROFIT  TEST 


13 


governing  (1)  the  building  and  maintenance  of  the  plant  and 
(2)  its  operation.  These  the  factory  manager  in  his  turn  can 
work  out  in  detail  (Figure  II),  standardizing  the  routine  and 
keeping  his  organization  adjusted  to  the  variable  and  unfore- 
seen factors. 

It  is  evident  that  there  is  still  something  for  the  factory 
manager  to  do.  Different  factories  can  succeed  and  do  succeed 
with  quite  different  policies.  A  method  of  approach  can  only 
suggest  a  general  plan  of  analysis;  it  cannot  supply  the  defi- 
ciencies in  the  man  who  is  to  carry  them  out.  The  right  relation 
between  cost,  quality  and  service,  for  example,  is  translated 
by  Henry  Ford  for  one  group  of  automobile  buyers  and  by 
Henry  B.  Joy  for  another  group.  The  manager  in  each  case  has 
laid  down  policies  that  suit  production  to  the  chosen  field.  A 
jeweler  who  sees  his  market  among  working  men  and  lodges 


Business  Activities  the  General  Manager  Controls 

Production 

Distribution 

Administration 

FIGURE  I:  The  first  step  in  analyzing  the  duties  of  management  is  to  divide  the  business  into 
(1)  the  manufacture  of  the  product,  (2)  the  distribution  of  the  product,  and  (3)  administration.  The 
administrative  activities  of  a  business  are  its  accounting,  purchasing,  costkeeping,  financial  and  other 
facilities  and  systems,  and  should  be  conducted  entirely  for  the  furtherance  of  honorable  and  profit- 
able manufacture  and  sale 

may  be  just  as  successful  in  developing  his  business  as  another 
who  by  location,  store  equipment  and  special  service  appeals  to 
the  custom  of  some  exclusive  West  End  clientele.  And  just  as 
different  business  men  have  adjusted  each  his  scheme  of  busi- 
ness to  his  customers,  so  they  have  also  established  policies  which 


14  _  ORGANIZING  FOR  PRODUCTION  _ 

suggest  correct  relations  to  competitors,  public  opinion,  law  and 
the  government. 

Once  the  general  policies  of  management  have  been  established 
with  due  regard  to  the  balance  between  the  three  factors  of  cost. 
quality  and  service,  comes  the  necessity  of  extending  these 
policies  in  detail  to  the  plant  and  operating  sides  of  manufactur- 
ing. The  man  at  the  head  of  the  business,  who  has  been  called 
the  general  manager,  puts  these  general  policies  into  effect  on 
the  production  side  through  the  man  in  charge  of  that  depart- 
ment, whatever  his  title,  but  who  may  be  called  the  factory 
manager.  Cost  and  output  are  the  two  guiding  words  in  shaping 
internal  factory  policies,  within  the  standards  set  for  quality 
and  service.  The  factory  manager's  job  is  to  get  the  tonnage 
or  the  yardage  or  whatever  the  unit  of  output,  at  the  lowest 
unit  cost  consistent  with  quality  and  service.  All  other  con- 
siderations are  supplementary  to  these.  He  will  be  a  balance 
wheel  on  the  production  machine,  not  letting  investment  get 
ahead  of  output  or  machine  equipment  charges  be  greater  than 
costs  in  hand  labor  might  be.  He  will  translate  the  demand  for 
efficiency  into  a  policy  of  getting  the  most  out  of  materials  and 
money,  men  and  machinery,  with  his  eye  always  on  the  human 
factor,  the  investment  factor  and  the  final  cost  factor. 

HOW  FACTORY  MANAGERS  ADJUST  THE  CONFLICTING  CLAIMS 
OF  QUALITY  AND  ECONOMY 


nnHIS  is  easy  to  say.  "When  it  comes  to  performance,  the 
overlapping  of  the  factors  with  which  he  has  to  work,  in  the 
words  of  an  automobile  plant  manager,  make  his  desk  look  like 
the  small  end  of  a  funnel  through  which  come  all  the  problems 
of  the  shop.  The  factory  manager  works  with  plant  and  equip- 
ment, machines  and  tools,  raw  materials,  labor  and  methods.  In 
adjusting  the  relations  among  these  various  factors,  cost,  output, 
service  and  quality  all  enter.  So  far  as  the  factory  manager  is 
concerned  the  buildings  in  which  he  works  enter  his  costs  pri- 
marily as  a  direct  investment  charge.  From  an  "unbalanced" 
point  of  view  he  might  believe  that  a  tent,  therefore,  because 
it  was  cheaper,  would  fill  the  requirements  of  a  roof  as  well  as  a 
more  expensive  building.  But  not  many  factory  managers  today 


APPLYING  THE   PROFIT  TEST 


15 


take  the  viewpoint  that  any  building  will  do.  Tumble-down 
buildings,  with  dirty  corners  and  slovenly  housekeeping  in  gen- 
eral, bringing  up  grave  questions  as  to  care  of  equipment, 
cost  of  lighting,  desertion  of  labor  and  loss  of  public  good  will, 


Recreation  Ficilltlei 
MlghbortHMd  S«Mt 


FIGURE    II:      This  analysis  of  production  problems  as  well  as  the  previous  chart,  present  the 
viewpoint  of  A.  W.  Shaw  in  his  book  "An  Approach  to  Business  Problems."     The  items  listed  sug- 
gest some  of  the  considerations  on  which  sound  policies  touching  location,  construction  and  other 
problems  should  be  based 

are  reflected  in  lower  quality  of  product  and  higher  final  cost. 
So  the  factory  manager  has  a  very  real  interest  in  the  condition 
and  maintenance  of  his  buildings  aside  from  the  rent  alone.  An 
overlapping  factor  in  costs,  arrangement  of  the  buildings,  is  of 
even  greater  importance.  A  badly  arranged  building  can  double 
handling  charges.  Every  factor  in  production  is  thus  inter- 
woven with  many  others,  and  any  short-sighted  policy  results  in 


ORGANIZING   FOR  PRODUCTION 


a  shift  of  the  balance  beam,  by  which  cost  goes  up  or  quality 
or  service  falls,  with  a  resulting  discrepancy  in  the  manager's 
final  calculation  (Figure  III). 

Investment  in  machinery  is  another  factor  that  must  be  bal- 
anced with  output  and  unit  costs.  A  well-known  engineer  claims 
that  hundreds  of  factories  are  over-equipped.  Factory  managers 


Balancing  Cost  against  Quality-Service  for  Different  Demands 


FIGURE  III:  The  factory  manager's  concern  is  that  what  he  produces  shall  have  such  qual- 
ity and  service  in  proportion  to  its  cost  that  the  sales  manager  can  profitably  distribute  it  at  a  price 
which  the  consumer  is  willing  to  pay  for  the  quality  and  service  delivered.  This  sketch  develops 
these  points  graphically.  Automobiles  are  marketed  at  various  prices  from  a  few  hundred  dollars 
to  several  thousand  per  car  and  the  demand  for  the  lower  priced  cars  is  much  broader  than  that  for 
the  expensive  ones,  as  indicated.  The  sketch  suggests  two  cars,  both  good  values,  marketed  at  about 
$800,  three  competing  cars  marketed  at  about  $1,700,  two  of  them  well  balanced  as  to  cost  and  quality- 
service,  but  the  other  priced  too  high  for  the  quality  delivered,  and  higher  priced  cars,  two  of  whjch 
are  delivering  more  quality  than  they  can  well  afford  to  at  the  price.  Either  of  these  blunders — to  give 
too  much  or  too  little — threatens  the  life  of  the  producing  concern 

like  mechanisms.  They  sometimes  forget  that  mechanisms  cost 
money  to  install  and  operate.  In  one  piano  factory  small  parts 
were  needed — pins,  screws  and  so  on.  Without  figuring  how 
many  he  could  use,  the  factory  manager  bought  an  automatic 
lathe.  He  soon  discovered  that  the  machine  did  the  job  so  well 


APPLYING  THE  PROFIT  TEST 17 

that  three  weeks  in  the  month  it  was  idle.  He  lacked  the  work 
to  keep  his  investment  busy.  On  the  other  hand,  an  automatic 
lathe  may  set  the  pace  for  an  entire  chain  of  operations  and  so 
be  a  very  real  aid  in  increasing  output  and  reducing  costs. 

Aside  from  the  output  and  cost  factors  to  be  considered  in 
connection  with  shop  equipment,  the  factory  manager  today  has 
found  it  necessary  to  consider  many  construction  and  machine 
problems  side  by  side  with  the  man  problem.  In  Cincinnati  a 
manufacturer  set  up  an  automatic  machine  in  which  sheets  of 
burnished  tin  slid  down  into  dies  directly  in  front  of  the  operator. 
So  many  accidents  occurred,  in  spite  of  precautions,  that  the 
machine  became  a  shop  hoodoo.  Finally,  an  outsider,  stooping 
to  watch  the  machine,  discovered  that  every  time  a  fresh  sheet 
slipped  into  place  it  flashed  the  light  from  the  window  behind 
the  operator  into  his  eyes.  Laterally  the  continual  flashing  had 
hypnotized  the  operator.  By  turning  the  machine  so  that  the 
operator  did  not  get  the  reflection  from  the  tin  sheets,  the  super- 
intendent put  the  "hoodoo"  at  rest. 

It  is  situations  like  these  that  bury  the  factory  manager  in 
detail.  The  danger  is  that  the  details  will  hide  the  main  point 
and  that  the  relation  between  cost  and  output  will  not  be  re- 
spected by  the  consulting  specialist,  who  might  see  this  problem, 
for  instance,  only  as  ' '  accident  prevention. ' '  The  main  point  at 
issue  is  not  how  elaborately  or  carefully  shall  a  machine  be 
guarded,  not  how  near  scientific  perfection  the  shop  can  operate 
regardless  of  the  cost,  but  how  can  sheer  carelessness  be  over- 
come, accident  and  insurance  costs  be  reduced,  the  good  reputa- 
tion of  the  plant  among  both  workmen  and  customers  be  main- 
tained, and  thus  a  balance  kept  between  cost  to  produce  and 
quality  delivered. 

Similarly,  materials  demand  balanced  consideration.  Cheap 
pine  for  making  chests  for  boat  tackle  in  an  eastern  navy  yard 
cost  twenty-five  dollars  a  thousand.  "White  pine,  at  sixty  dollars 
a  thousand,  it  was  recognized,  would  make  a  better  chest,  because 
it  would  not  warp ;  but  it  was  thought  that  the  white  pine  chests 
would  cost  too  much.  However,  a  trial  lot  of  a  hundred  was 
put  through  made  of  the  white  pine,  with  the  surprising  result 
that  while  the  material  cost  per  box  was  higher,  the  total  cost 
per  box  was  lower.  The  material  worked  up  better  and  the  labor 


18 ORGANIZING  FOR  PRODUCTION 

cost  per  box  was  enough  smaller  to  offset  the  higher  raw  material 
cost. 

This  is  a  simple  example  of  the  well-known  fact  that  first  cost 
is  not  the  final  cost  of  materials  which  enter  into  the  making 
of  a  product.  The  factory  manager  has  many  problems  involv- 
ing material  to  consider  from  the  balanced  viewpoint  of  cost, 
quality  and  output.  Traditional  first  costs  hinder  the  reduction 
of  many  high  total  costs.  Possible  economies  in  buying,  storing 
and  processing  material  are  found  so  easily  in  the  average  fac- 
tory, that  outside  consulting  experts  often  count  upon  their 
results  in  the  stores  and  material  sections  to  win  support  for 
them  in  further  reorganization  work. 

Too  much  capital  tied  up  in  stock  is  a  common  case  of  unbal- 
anced management  of  materials.  In  one  concern  the  total  accu- 
mulations in  unnecessary  lumber  stock  brought  enough  when  sold 
to  make  a  big  hole  in  the  first  year's  costs  of  over-hauling  the 
plant.  Material  for  discarded  models,  extra  stocks  for  parts  only 
needed  in  small  quantities,  material  relatively  too  high  in  qual- 
ity for  the  total  cost  of  the  product,  all  were  sorted  out  of  the 
lumber  yard  and  sold. 

LOOKING  AT  LABOR  AS  THE  TIME  FACTOR  WHICH  DETERMINES 
THE  PRODUCTIVENESS  OF  THE  INVESTMENT 

T"1  HAT  problems  of  labor  are  found  interwoven  with  the  prob- 
lems of  construction,  arrangement,  material  and  machinery 
has  been  seen.  Few  factors  in  manufacturing,  indeed,  can  in  the 
final  analysis  be  considered  apart  from  labor.  The  general  man- 
ager or  board  of  directors  may  lay  down  broad  policies  particu- 
larly with  relation  to  those  phases  of  labor  which  touch  wide- 
spread social  conditions  in  the  community  or  nation.  The  fac- 
tory manager  is  responsible  for  the  interpretation  of  these 
policies  in  getting  out  the  goods.  He  must  meet  the  problem 
of  cost  of  doing  work. 

One  important  incentive  to  the  invention  of  highly  ingenious 
machinery  in  America  has  been  the  high  cost  of  workmen. 
Factory  methods  in  France,  for  example,  are  said  by  observers 
to  be  far  behind  those  in  America,  considered  from  the  view- 
point of  the  conservation  of  time  and  energy.  In  striking  his 
balance  of  cost,  quality  and  service,  labor  time  is  relatively  so 


These  offices  symbolize  the  freedom  from  detail  which  management  needs.     Above  appears  Henry 
Ford  at  his  desk.     Below  is  the  office  of  Theodore  N.  Vail,  president,  American  Telephone  and  Tele- 
graph Company,  designed  to  accommodate  a   directors'  meeting  or   conference,  and   through  the 
telephone,  in  touch  with  an  organization  as  broad  as  the  continent 


Anexecuti 

and 

equipment  indicate  the  owner's  intense  interest  in  the  routine  of  his  business.     Below  appears  the 
famous  board  room  at  26  Broadway,  where  the  directors  of  the  Standard  Oil  Company  meet 


:  workroom  designed  essentially  for  service  is  the  office  of  Henry  B.  Joy,  president  of  the 
Packard  Motor  Car  Company.     Not  only  the  modern  appliances,  but  the  wall  de( 


APPLYING   THE   PROFIT  TEST 21 

cheap  that  to  the  Frenchman  time  studies  seem  futile.  Similarly 
it  has  not  seemed  urgent  to  invest  in  specialized  machinery  to 
save  labor.  The  inclination  has  been  to  assume  that  the  special, 
high-priced  machine  cannot  compete.  In  this  country,  on  the 
other  hand,  specialization  in  machinery,  in  organization,  in  hir- 
ing, training  and  handling  labor  is  made  necessary  by  a  relatively 
higher  wage  scale  as  well  as  the  demand  for  greater  output.  Care- 
ful observers  agree,  however,  that  the  adjustment  between  cost, 
quality  and  service  has  been  so  well  maintained  that  the  sought- 
for  combination  of  large  output  and  low  unit  costs  are  found  in 
many  of  our  industries,  even  under  the  higher  wage  scale. 

While  specialization  is  now  being  carried  further  into  the 
methods  of  hiring  and  training  men  than  ever  before,  the  aver- 
age factory  manager's  labor  problem  still  revolves  around  get- 
ting more  work  done  in  a  given  time  after  the  man  is  hired. 
The  factory  manager  translates  the  broader  problem  of  labor 
management  into  the  definite  task  of  using  time  more  profitably. 
Time  costs  money.  The  more  time  a  piece  of  work  takes,  the  more 
expenses  of  every  sort  cling  to  it.  Therefore,  men  are  picked 
and  paid  for  fitness  and  capacity,  because  when  they  get  started 
on  a  piece  of  work  they  save  indirect  costs  by  doing  it  quicker, 
without  costly  supervision,  forcing  or  driving.  Processes  and 
machines  are  analyzed  to  see  if  there  is  a  quicker,  better  way  to 
turn  out  the  work;  and  organization  methods  are  developed  not 
to  hurry  work  in  the  sense  of  skimping  it,  but  to  eliminate  the 
useless  time-consuming  operations  and  motions. 

KEEPING  ADMINISTRATIVE  SYSTEMS  SIMPLE  AND  WELL  ADJUSTED 
TO  THE  SIZE  OF  THE  BUSINESS 

C  MOOTHLY  to  carry  out  and  control  this  organized  group  of 
plant  and  operating  activities  called  production,  the  factory 
manager  needs  administrative  machinery.  And  here  again  he 
has  the  opportunity  to  separate  the  essential  from  the  non-essen- 
tial. On  the  one  hand,  he  may  carry  in  his  head  all  the  plans, 
schedules  and  records,  and  all  his  methods  of  control  may  be 
personal.  He  may  belong  to  that  class  of  managers  who  are 
rather  proud  of  the  fact  that  they  can't  get  away  from  their 
business.  Or  he  may  overload  bw  work  with  cards  and  forms 


ORGANIZING  FOR  PRODUCTION 


and  miscellaneous  facts,  under  the  mistaken  notion  that  they 
will  run  his  place  for  him. 

Somewhere  between  these  extremes  each  manager  finds  his 
own  ground  and  fits  methods  to  conditions  under  the  direction 
of  his  guiding  principles.  The  manager  of  an  electrical  appli- 
ance factory  explained  his  cost  system  laughingly  as  "spas- 
modic." "Labor  and  material  costs  are  assembled  on  every 
order  which  goes  through  the  factory,"  said  he,  "but  we  total 
the  final  costs  only  when  we  have  some  particular  need  of  them. 
I  can't  afford  to  keep  clerks  figuring  costs  I  might  never  use." 

His  factory  is  a  small  one.  He  has  recognized  that  a  cost  sys- 
tem has  two  functions:  it  can  control  expenses  and  it  can  keep 
histories.  He  cannot  afford  to  keep  histories  of  all  the  details 
of  his  business.  On  the  other  hand,  he  is  close  enough  to  the  de- 
tails himself  to  check  pretty  accurately  how  the  costs  are  run- 
ning. Another  manager  in  a  larger  factory,  or  in  one  where 
orders  are  more  varied  in  character,  would  probably  need  more 
detailed  figures  to  control  expenses. 

This  is  merely  one  illustration  of  the  general  policy  that  in 
establishing  any  routine  method  of  doing  work,  the  cost  of  get- 
ting the  work  done  must  be  in  proportion  to  the  cost  of  the  work 
itself.  The  factory  manager  could  as  well  afford  to  provide  him- 
self with  a  magnet  on  a  handle  and  pick  up  nails  on  his  daily 
rounds  of  the  plant  as  to  establish  a  twenty-dollar-a-month 
routine  to  check  a  possible  total  loss  of  ten  dollars.  Yet  such 
things  have  happened. 

What  has  been  said  of  costs  is  merely  typical  of  administra- 
tive machinery  in  general.  Before  deciding  on  some  far-reaching 
reorganization  it  is  always  necessary  to  get  outside  of  the  details 
involved,  and  see  the  whole  plan  from  a  detached,  common-sense 
point  of  view.  Just  as  one  horse  is  more  easily  handled  than 
a  six-horse  team,  so  the  small  factory  does  not  require  the  same 
amount  of  administrative  harness  as  the  larger  one,  and  the 
manager  of  the  growing  plant  sometimes  encounters  the  diffi- 
culty of  being  too  big  —  too  unwieldy.  There  is  apparently  a 
relation  between  size  and  efficiency.  So  well  administered  a 
concern  as  the  General  Electric  Company  has  started  a  process 
of  decentralization,  so  that,  instead  of  huge  factories  with  tre- 
mendous departments,  it  will  have  smaller  factories,  each  with  a 


APPLYING  THE  PROFIT  TEST 23 

responsible  head  and  smaller  departments.  Instead  of  having,  for 
example,  one  large  drafting  department,  one  large  engineering 
department,  one  large  production  department,  and  so  on,  for 
unlike  classes  of  commodities  which  the  company  makes,  members 
of  these  administrative  departments  are  grouped  in  the  building 
with  the  operating  departments  for  some  particular  commodity  or 
group  of  similar  commodities.  So  there  is  the  turbine  shop  with 
its  machine  and  erecting  shops,  engineering,  drafting  and  pro- 
duction departments  under  one  head,  and  the  heating  and  other 
appliances  are  similarly  grouped  in  separate  factories. 

At  the  same  time  the  big  industries  are  laboratories  of  methods 
and  practice  for  smaller  factories.  Large  output  magnifies,  and 
so  reveals  wastes  otherwise  neglected.  Volume  of  work  and 
waste  warrants  setting  a  man  to  finding  out  the  reason  why; 
and  the  reports  of  his  findings  in  the  large  organization,  becom- 
ing as  they  are  more  and  more  professional  in  character,  are 
published  for  the  advancement  of  the  whole  industry.  So  every 
concern,  big  and  little,  peers  into  the  industrial  microscope  and 
learns  from  others. 

WHAT  TO  DO  FIRST  IN  REORGANIZATION  AND  HOW 
TO  STANDARDIZE  ROUTINE 

O  ECOGNIZING  all  these  problems  and  conditions,  the  main 
thing  in  factory  management,  after  all,  is  to  make  a  be- 
ginning in  betterment.  No  big  plan  is  gotten  under  way  as  a 
whole.  The  first  step  to  take  is  to  choose  some  small  section  of 
the  big  plan  to  put  into  effect.  One  manager  who  had  an  old 
plant  to  reorganize  for  his  company  spent  three  weeks  analyzing 
the  conditions,  then  made  a  general  chart  of  organization,  list- 
ing the  duties  of  the  men  he  had  to  work  with.  Then  he  tackled 
the  purchasing  department  as  the  one  which  needed  immediate 
attention.  From  this  he  went  to  checking  up  the  payroll,  then 
to  rearranging  the  machinery,  and  finally  to  working  out  a 
routine  schedule. 

In  another  case  the  first  step  to  take  was  finding  out  which  of 
the  products  being  made  were  turned  out  with  a  profit.  It  was 
found  that  out  of  a  group  of  products  three  were  actually  carry- 
ing the  burden  of  the  business.  The  rest  were  eating  up  profits. 


24 ORGANIZING  FOR  PRODUCTION 

The  money-losers  were  sold,  patents  and  all,  to  specialty  makers. 
Two  were  dropped  completely  and  the  patterns  destroyed.  The 
factory  building  was  sold  and  a  smaller  and  better  arranged 
factory  bought  with  the  proceeds.  Manufacturing  of  the  profit- 
able lines  then  proceeded  successfully. 

When  the  lines  to  manufacture  are  determined,  schedules  and 
goals  of  performance  on  the  basis  of  output  and  costs  can  be  set 
and  the  detail  policies  of  management  carried  out,  as  has  been 
described  in  previous  volumes.  Shortly  the  head  of  production 
finds  himself  master  of  a  smoothly  running  mechanism  of  build- 
ings, machines  and  men,  shaping  materials  into  salable  products 
according  to  standard  policies  and  instructions. 

One  factor  alone  remains — the  variable  and  unexpected. 
"When  orders  are  coming  in  regularly,  men  contented  and  the 
routine  running  smoothly,  look  out  for  squalls,"  says  one  man- 
ager. The  world  of  demand,  no  less  than  the  organization  itself, 
is  always  changing.  Readjustments,  decisions  in  uncharted 
fields,  emergencies — these  are  the  desk  problems  of  the  chief; 
and  they  bring  out  the  real  qualities  of  management.  There 
are  dozens  of  everyday  problems  to  settle  under  the  steady  con- 
ditions. But  the  test  of  any  organization  comes  when  the  un- 
usual happens.  The  manager  must  not  only  create,  maintain 
and  animate  an  organization  in  the  broadest  sense,  he  must  act 
as  its  sales  manager.  Plan  boards  without  orders  hung  on  their 
hooks  are  rather  useless  pieces  of  furniture. 


II 


WORKING  OUT  AN  EFFECTIVE 
ORGANIZATION 


FITTING  together  men  and  work  in  a  manufacturing  plant 
is  usually  a  steady  remodeling  process.    The  manager  deals 
not  with  business  as  it  might  be,  but  with  conditions  as  they 
are.    The  object  and  end  of  organizing,  it  may  be  repeated,  is  not 
to  form  a  beautifully  symmetrical  organization  with  circles  and 
lines  of  authority  worked  out  in  an  ideal  plan,  but  to  keep  John 
and  Carl  and  Tony  and  Dan  working  together  in  a  way  at  once 
mutually  economical  and  profitable. 

To  organize,  therefore,  usually  means  to  realign  or  readjust 
men  already  at  work  in  order  to  better  costs  and  output.  Organ- 
ization in  most  cases  is  reorganization  and  the  manager  who  suc- 
cessfully weeds  out  wasteful  practices  in  his  establishment  never 
forgets  the  first  two  letters — the  old  ways  he  must  overcome  as 
well  as  the  new  ones  he  must  introduce.  He  is  working  with 
men — human  beings  like  himself — men  who  think  about  as  he 
does,  men  who  go  home  at  night  to  live  practically  as  he  does  and 
whose  human  reactions  are  much  the  same  as  his.  Every  man- 
ager who  has  opened  up  a  new  plant  or  reorganized  one  already 
in  operation  knows  that  the  settled  habits  and  views  of  his  execu- 
tives and  men  are  to  be  dealt  with,  no  less  than  his  own  ideas 
and  plans. 

Obviously  the  first  step  to  take  before  overhauling  an  existing 
organization  or  planning  a  new  one  is  to  study  this  human-nature 
side  of  the  problem.  Here  the  difference  between  the  art  or  per- 
sonal side  of  management  as  distinct  from  the  scientific  or  im- 
personal side  becomes  evident.  Some  managers  seem  to  have  a 
natural  fund  of  human  understanding — a  knack  of  knowing  the 


§6 ORGANIZING  FOR  PRODUCTION 

other  man's  viewpoint  and  making  natural  readjustments.  Some 
attain  their  leadership  by  the  force  of  genius;  others  by  the 
strength  of  example.  There  is  no  way  of  saying  which  is  best, 
because  in  the  average  business  the  organization  is  successful 
only  so  far  as  it  reflects  the  personality  and  character  of  the  head 
of  it.  In  the  one-man  business,  the  natural  leader  may  carry 
the  torch  of  enthusiasm  in  his  organization;  in  the  corporate 
business  the  directorate  will  act  wisely  when  it  blends  individuali- 
ties under  the  leadership  of  policies  to  which  many  have  contrib- 
uted their  best  thought.  After  the  organizer  and  head  of  the 
business  has  made  an  analysis  of  the  men  he  has  to  work  with, 
therefore,  he  should  inventory  his  own  limitations  and  special 
powers.  The  type  of  organization  which  the  manager  should 
choose  is  as  much  a  matter  of  fitting  the  methods  to  himself  as  it 
is  of  adapting  them  to  the  men  who  work  with  him  in  his  business. 

At  this  point  much  so-called  efficiency  work  breaks  down.  A 
mechanism  of  management  may  be  installed  by  a  consulting  man- 
ager without  regard  for  the  natural  attributes  of  the  permanent 
head  of  the  business,  who  pays  the  bills.  So  installed,  the  method 
of  organization  will  survive  only  so  long  as  the  man  who  furnishes 
the  power  for  it  stays  on  the  job.  When  he  leaves  by  the  front 
door,  the  old  abuses  which  he  came  to  correct,  and  did  correct, 
come  trooping  in  again  at  the  back  door.  Not  that  there  are  no 
principles  which  can  be  transmitted  from  manager  to  manager — 
far  from  it.  The  important  point  for  the  manager  to  realize  in 
his  task  of  making  his  plant  a  permanent  unit  for  the  purposes 
of  his  enterprise  is  that  he  has  a  natural  way*  of  working  and 
that  his  way  has  its  bearing  on  any  methods  developed  under  him 
or  by  an  outsider.  Reorganization  usually  involves  a  radical 
change  in  the  viewpoint  of  the  management.  If  the  chief  will 
not  or  cannot  conform  in  all  essential  ways  to  sound  principles, 
the  latter  must  of  course  be  compromised  to  suit  his  peculiarities. 

From  his  own  experience,  every  man  can  judge  the  persistency 
of  this  natural  way  of  working.  Some  see  figures  in  graphic  form 
more  quickly  than  in  tables.  To  the  man  "raised  on  figures" 
from  the  accounting  side,  tabular  analyses  are  just  as  effective 
as  charts.  One  man  will  view  his  business  as  a  salesman,  another 
as  an  engineer,  a  third  as  a  keen  buyer,  a  fourth  as  a  capitalist. 
The  end  of  management  is  the  same  for  all,  the  principles  of  man- 


PLANNING  THE  ORGANIZATION 27 

agement  equally  are  universal,  but  their  individual  conceptions  of 
management  are  vastly  different.  Each  must  supplement  himself 
in  his  organization,  and  make  such  adjustments  that  it,  as  a  unit 
in  which  he  himself  is  included,  fits  his  business  aim  (Figure  IV). 
One  manager  who  is  known  throughout  the  world  as  a  genius, 


How  the  Manager  Supplements  His  Abilities 


FIGURE  IV:  Managers  are  successful,  it  has  been  said,  in  proportion  as  they  have  been  able  to 
surround  themselves  with  men  who  supplement  their  own  powers.  In  this  sketch,  the  unshaded  area 
indicates  special  abilities  the  manager  possesses,  as  in  finance,  selling,  and  buying.  By  employing 
other  men  (shaded  portions)  gifted  with  abilities  that  round  out  his  weak  points,  as  man  handling, 
production  and  accounting,  the  manager  mans  the  concern  for  success 

a  master  mechanic  and  an  improver,  maintains  a  desk  which  is 
a  by-word  in  his  factory.  To  an  orderly,  methodical  mind  his 
methods  of  work  are  atrocious.  Yet  this  same  manager  has 
molded  men  into  an  organization  which  gets  results  under  him. 
The  cluttered  desk  merely  indicates  that  the  spirit  behind  the 
method  is  greater  than  the  method.  Extra  force  simply  is  needed 
to  overcome  such  a  lack  of  order. 

SUBDIVISION  OF  WORK  THE  UNDERLYING  PRINCIPLE  IN  ORGANIZING 
—THREE  MAIN  TYPES  OF  ORGANIZATION 


/"\NCE  a  manager  has  determined  on  his  own  place  in  the 

scheme  of  things,  he  will  begin  to  look  over  the  history  of 

management  and  see  what  principles  other  men  have  discovered 

and  what  methods  they  have  worked  out  to  supply  their  own 

deficiencies  and  realize  their  plans.    The  present  interest  in  the 

scientific  approach  to  the  problems  of  management  does  not  sig- 

nify that  it  is  only  within  the  last  twenty-five  years  that  men 

have   suddenly   recognized  efficiency   principles  and   methods. 

'Scientific   Management"  is  an  evolution    (Figure  VI).     As 


28 


ORGANIZING  FOR  PRODUCTION 


machinery  has  brought  about  "the  transference  of  skill"  from 
the  inventor  or  designer  to  the  power-driven  mechanism,  a  com- 
mittee for  the  American  Society  of  Mechanical  Engineers  has 
suggested,  so  scientific  principles  of  management  transfer  the 
skill  of  the  manual  operator  to  the  planning  room,  and  through 


Essentials  in  Building  an  Organization 


Select  and 

Enlist  His  Self- 

Train  Man 

,  

interest  In  Success 

to  Fit  It 

Of  the  Organization 

Group 

Correlated 

Understudy 

to  Form 

Each  Position 

Departments 

FIGURE    V:       In  building  an  organization,  the  first  division  of  routine  duties  is  into  planning 

the  work  and  executing  the  work.     In  many  enterprises,  this  primary  division  is  never  made,  and 

all  efforts  at  scheduling  operations  fail  because  it  is  not  recognized  that  the  shops  must  be  allowed 

time  to  plan  their  work.    Further  essential  steps  in  organization  also  are  indicated 

the  planning  room,  redistribute  it  to  the  advantage  of  all  the 
operators.  Similarly  it  may  be  said  that,  just  as  machinery  has 
become  gradually  perfected,  over  the  last  hundred  years,  so  man- 
agers gradually  have  evolved  and  put  on  record  better  methods 
of  working  with  all  the  factors  in  production. 

Here  and  there  an  individual  manager  in  an  attempt  to  state 
his  philosophy  of  management  has  formulated  a  plan  of  proced- 
ure that  has  proved  successful  in  his  plant  and  that  brings  for- 
ward ideas  which  other  men  can  apply  under  certain  circum- 
stances. Frederick  W.  Taylor's  system  of  scientific  management 
is  the  most  striking  example  of  this  development  of  standard 
methods.  The  precision  of  his  work  and  his  devotion  to  the  carry- 
ing out  of  what  he  believed  were  fundamental  principles  of  man- 
agement gave  him  a  unique  position  in  the  field  of  industrial 
organization. 

To  choose  a  fit  type  of  organization  for  a  particular  factory, 
then,  the  manager  must  recognize  (1)  that  the  organization  is 


PLANNING  THE   ORGANIZATION 


not  the  end  of  management,  but  a  means  to  the  end;  (2)  that  he 
is  adapting  it  to  conditions  as  they  are  and  not  as  they  might  be ; 
(3)  that  he  himself  is  an  important  condition  bearing  on  the 
methods  he  chooses,  and  (4)  that  he  must  expect  that  his  men 


Line  Organization  in  an  Early  Stage 


Foreman 

A 

Foreman 

B 

Foreman 

C 

Each  Foreman  Had  These  Duties 


Layout  of 
Work 

Clerical  and 
Accounting 

Purchasing 
and  Handling 
Materials 

Hiring  and 
Handling  Men 

Routing  and 
Dispatching 
Work 

Maintenance 
and  Repairs 

Inspection 

Each  Workman  Had  These  Duties 


Plan  Work 


Maintenance. 
Conditioning 
and  Repairs 


FIGURE  VI:  Under  the  early  line  or  military  organization,  the  lines  of  authority  ran  directly 
from  the  management  to  the  foreman  and  from  him  to  his  men.  Each  foreman  was  responsible  to  the 
manager  for  all  the  work  of  his  department,  and  each  workman  looked  to  the  foreman  for  orders  of 
every  sort.  Contrast  this  plan  with  those  indicating  the  development  of  staff  and  functional  duties 
(Figures  VII  and  X) 

will  grow  and  develop,  and  that  his  plan  must  fit  such  develop- 
ment. While  principles  remain  constant,  he  must  expect  that 
conditions  vary  and  both  men  and  methods  change. 


SO ORGANIZING  FOR  PRODUCTION 

To  suit  these  requirements  of  plants  in  all  stages  of  develop- 
ment, organizations  have  naturally  varied  from  the  simplest  to 
the  most  complex.  Throughout  these  forms,  however,  one  plain 
principle  prevails — the  subdivision  of  work.  Whenever  the  plant 
had  enough  work  of  one  kind  to  make  a  job  for  a  man  or  an 
executive,  some  one  was  appointed  to  devote  himself  to  that  work, 
to  the  relief  of  several  other  men  with  whom  it  had  been  only  a 
side  line.  At  first  this  subdivision  of  work  followed  no  definite 
scheme;  storekeeping,  purchasing,  costs,  power  and  other  special 
services  naturally  split  off.  Gradually,  however,  the  work  has 
become  definitely  classified,  first,  into  (1)  execution  and  (2)  aid 
toward  better  methods,  with  the  further  subdivision  of  execution 
into  (a)  planning  the  steps  in  the  work,  (b)  putting  it  through 
and  (c)  contributing  the  special  services  that  supply  material, 
power  and  so  on. 

If  the  size  of  the  business  warrants,  each  subdivision  of  the 
work  is  entrusted  to  a  distinct  department  under  a  specialist  who 
has  a  well-defined  sphere  of  responsibility.  It  is  then  necessary 
only  to  make  sure  that  no  important  duty  shall  be  left  undefined 
and  undone.  In  the  small  concern,  however,  planning  and  execu- 
tion are  often  combined  in  one  man.  If  he  will  analyze  his  work, 
he  will  find  part  of  his  time  devoted  to  planning,  part  to  opera- 
tion and  part  to  betterment. 

As  this  division  of  duties  works  out,  organizations  fall  into 
various  classes,  of  which  three  are  distinctive :  the  line,  the  line 
and  staff,  and  the  so-called  functional  scheme.  These  names,  it  is 
true,  have  their  origin  in  tradition  rather  than  in  present  condi- 
tions. The  boundaries  between  the  different  types  are  not  clean 
cut — only  the  principle  of  specialized  work  has  become  more  dis- 
tinct. But  the  manager  who  understands  the  needs  of  his  busi- 
ness will  find  that  his  organization  falls  naturally  under  one  of 
these  heads  or  some  offshoot  from  it,  and  that  it  will  assist  him 
to  know  how  each  form  works,  what  its  advantages  and  disad- 
vantages are  and  what  type  his  conditions  demand. 

Line  organization  is  the  simplest  in  its  conception  and  the  most 
common.  It  is  the  simplest  because  it  is  the  most  natural  and 
goes  back  to  the  military  alignment  of  the  earliest  days  when 
the  strongest  man  was  chosen  or  made  himself  leader.  In  that 


PLANNING  THE  ORGANIZATION 31 

age  each  head  hired,  trained,  fed  and  exercised  full  authority 
over  his  company.  Similarly,  in  the  elementary  forms  of  line 
organization,  each  foreman  hires,  rates,  instructs  and  releases  his 
men,  buys  his  own  supplies,  schedules  his  own  share  of  the  work 
and  "thinks  out"  his  own  corrections.  Loose  ends  with  which 
several  foremen  are  equally  concerned,  are  thus  likely  to  be  neg- 
lected, on  the  basis  that  "every  man's  business  is  no  man's 
business. ' ' 

Nearly  every  one-man  concern  has  a  line  organization,  in  which 
responsibility  for  results  is  delegated  directly  from  proprietor 
through  manager  and  foremen  down  to  the  operatives.  For  the 
most  part,  the  small  concern  in  which  no  highly  specialized  divi- 
sion of  work  can  profitably  be  made,  is  restricted  to  the  elementary 
line  organization,  although  the  tendency  is  to  split  off  such 
operating  functions  as  purchasing,  employment,  storekeeping,  and 
inspection ;  also  it  is  every  year  becoming  feasible  to  engage  the 
part-time  services  of  outside  specialists  in  more  and  more  staff — 
that  is,  advisory  and  improvement — capacities.  The  line  organi- 
zation also  is  preferred  in  certain  industries  where  operation, 
though  simple,  is  rigidly  continuous,  and  where  a  military  cer- 
tainty as  to  who  is  responsible  is  the  first  consideration.  Cement- 
making  is  an  example  of  this  situation. 

So  the  line  organization  is  not  essentially  a  "specialized" 
organization.  Today,  however,  the  greatest  immediate  gain  to  a 
business  and  to  the  individuals  engaged  in  it  comes  when  the 
business  and  each  individual  specializes  and  masters  one  field. 
The  two  other  broad  types  of  organization,  to  which  the  manager 
of  an  unsatisfactory  line  organization  may  turn  for  help,  are, 
therefore,  organizations  in  which  improvement  as  well  as  opera- 
tion is  specialized. 

Line  and  staff,  except  by  name  and  degree  of  specialization, 
is  not  particularly  new.  "Whenever  any  man  of  authority  in  a 
manufacturing  establishment  gets  outside  the  traditional  way  of 
doing  the  particular  task  and  asks  himself  three  questions,  he 
has  a  conception  of  management  which  will  soon  bring  him  a 
"staff."  These  questions  are: 

(1)  "Why  are  we  doing  the  job  this  way?" 

(2)  "Is  there  a  better  way  to  do  it?" 


32 ORGANIZING  FOR  PRODUCTION 

(3)  "How  can  we  work  out  this  better  and  more  economical 
way?" 

If  a  manager  asks  these  questions  and  wants  action  in  getting 
at  the  correct  answers,  his  next  step  is  to  pick  out  some  particular 
activity  or  operation  in  the  business  and  set  a  man  at  work 
answering  his  question.  The  "specialist"  working  outside  the 
routine  of  the  line  organization  is  the  first  member  of  his  "staff." 
Obviously  the  business  must  have  reached  a  position  where  the 
work  is  complex  and  the  volume  large,  before  many  full-time 
specialists  can  be  maintained  economically  on  staff  or  critical 
service.  The  part-time  employment  of  the  outside  specialist  may, 
however,  be  undertaken  even  by  the  small  concern. 

Betterment — organized  study,  investigation  and  counsel,  de- 
signed to  establish  some  improvement  in  the  operation  of  the 
plant — therefore,  is  the  feature  which  distinguishes  the  line  and 
staff  from  the  line,  in  which  improvement  is  unorganized.  The 
staff  man,  having  none  of  the  responsibility  for  getting  out  the 
product,  can  view  the  problem  of  future  output  from  a  fresh 
standpoint.  A  line  and  staff  organization,  as  it  will  develop  from 
this  siimple  beginning,  is  a  line  organization  plus  a  group  of 
staff  experts  chosen  with  regard  to  their  capabilities  of  finding 
and  standardizing  better  ways  to  do  certain  important  functions 
of  the  business.  In  either  type  of  organization,  a  thorough  sub- 
division of  operating  functions  may  exist.  The  staff  feature 
simply  organizes  betterment,  in  connection  with  one  or  more  im- 
portant functions. 

What  these  functions  are,  at  the  start  at  least,  depends  on  the 
business.  In  the  paint  business  the  economizing  and  handling 
of  materials  is  relatively  of  more  importance  than  the  economiz- 
ing of  labor.  In  the  machine-tool  business,  where  labor  enters 
so  largely  into  the  cost  and  value  of  the  finished  products,  the 
investment  in  skilled  labor  warrants  maintaining  "staff"  experts 
to  devise  methods  of  making  that  labor  go  farther.  The  chemist, 
a  specialist  or  staff  man,  is  a  necessity  in  a  modern  paint  factory. 
Specialization  of  duties  in  a  large  machine  industry  may  also 
call  for  a  chemist ;  but  in  the  industry  as  a  whole,  the  study  of 
the  time  it  takes  to  machine  a  piece  of  tool  steel  is  of  relatively 
greater  importance  to  the  manager  than  the  composition  of  the 
steel  which  is  delivered  to  him  on  specification.  Standards  of 


PLANNING  THE  ORGANIZATION 


33 


•  •-! 

(. 
•^> 

•1 
- 

V_j 

Planning  the  Work           U- 

Factory  Manager 

Securlng  Materials  and  Tools  ]••» 

Department 
r  Superintendent  A 

Caring  for  Tools  and  Machines  (•  n 

Superintendent 
of 
Production 

Foremen  and 
Workmen.  Who 
Each  Formerly 
Attended  to 
Everything  as: 

Execution  of  Work 

Moving  the  Work            Kps 

1 

! 

i 
I 

Department 
Superintendent  B 

Inspection                 L  -  . 

Clerical  Work              K~ 

-j          Stores  Department 

-I      Maintenance  Department       -- 

Operating 
(Special  Service)  Departments 

1 

-      Transportation  Department     L— 

! 

!    Functional  Work 
'-      Organized 
Separately 

Inspection  Department       k— 

-       Engineering  Department      |— 

Planning  Work 

•j     Order  of  Work  Department      ~_1~. 

FIGURE  VII :  Various  functions  which  were  originally  a  part  of  every  workman's  job  have  gradu- 
ally been  entrusted  to  specialists,  such  as  purchasing  agent,  inspectors,  and  engineers.  The  develop- 
ment of  the  functional  side  of  an  organization  out  of  the  line  or  military  type  is  indicated  by  the 


dotted  lines 


34 ORGANIZING   FOR  PRODUCTION 

time,  therefore,  are  even  more  urgently  a  subject  for  "staff" 
study  in  such  an  industry. 

In  other  words,  certain  "natural"  staff  or  advisory  func- 
tions exist  in  nearly  every  business,  and  the  definite  line  and 


HARRINGTON  EMERSON'S  TWELVE   PRINCIPLES   OF 
EFFICIENCY 

1.  Ideals  7.  Planning  and  Dispatching 

2.  Commonsense  and  Judgment  8.  Standards  and  Schedules 

3.  Competent  Counsel  9.  Standardized  Conditions 

4.  Discipline  10.  Standardized  Operations 

5.  Fair  Deal  11.  Written     Standard     Practice 

6.  Reliable,  Immediate  and  Accu-  Instruction 

rate  Records  12.  Efficiency  Rewards 


FIGURE  VIII:      The  twelve  famous  principles  of  efficiency  upon  which  Harrington  Emerson  has 
based  his  scientific  management  work  are  here  listed.      Such  principles  as  Ideals  towards  which  the 
business  can  work,  definite  Planning  and  Dispatch  of  all  work  in  order,  Standard  Practice  and   Re- 
wards based  upon  individual  efficiency  are  fundamental  in  any  business 

staff  organization  is  simply  a  bringing  together  and  aligning 
of  such  efforts  at  improvement  in  accordance  with  the  dictates 
of  common  sense  and  profit.  Such  a  development  is  most  often 
connected  with  the  name  of  its  philosopher,  Harrington  Emerson, 
whose  principle  of  "competent  counsel"  is  typified  by  the  staff. 

DUTIES  OF  STAFF  SPECIALISTS— HOW  TO  SECURE  COOPERATION 
BETWEEN  THE  LINE  AND  THE  STAFF 

Q  0  the  line  and  staff  plan,  like  the  pure  line  organization,  still 
inclines  to  the  old  military  ideal  of  one  all-around  boss  for 
the  regular  workman  in  all  cases.  The  manager  who  would 
reorganize  on  line  and  staff  principles  leaves  the  line  organiza- 
tion practically  as  it  is,  relying  upon  it  to  execute  his  orders. 
Supplementary  to  the  line  organization,  however,  he  develops 
a  staff  of  specialists,  each  of  whom  shall  work  to  raise  the  stand- 
ards in  some  operation,  as  machine  maintenance,  inspection,  trans- 
portation. The  work  of  experts  on  the  handling  of  materials, 
for  example,  or  the  laboratory  testing  of  raw  materials,  forms 
the  basis  for  final  action  on  the  part  of  the  line  managers  and 
department  heads.  A  staff  man  works  out  standards,  which  are 
turned  over  to  the  head  of  the  business.  He  in  turn,  as  both  the 


PLANNING  THE  ORGANIZATION §5 

deciding  mind  and  the  executive  power,  has  the  favored  recom- 
mendations carried  out  by  the  line  organization. 

It  can  readily  be  seen  that  the  line  and  staff  organization  will 
fit  a  variety  of  conditions.  It  may  be  applied  in  whole  or  in  part. 
The  one-man  shop  can  consult  a  whole  staff  of  outside  experts. 
The  small  business  man  can  employ  a  single  specialist ;  the  large 


When  It  Pays  to  install  More  Scientific  Methods  of  Management 


Raw  Material  Quality  Output 

at  Low  Cost 


FIGURE  IX:  Betterment  specialists  sometimes  urge  the  manager  to  do  away  with  all  roundabout 
methods  and  make  production,  storekeeping  and  cost  keeping  follow  an  absolutely  direct  routine 
But  the  manager  knows  that  every  method,  as  indicated,  tends  to  become  a  curve  and  that  the  con- 
stant pressure  required  to  flatten  the  roundabout  into  the  ideal  method  sometimes  costs  more  than 
to  compromise  on  a  reasonably  direct  routine.  Not  the  scientific  way,  but  the  line  of  most  con- 
sistent net  profit  is  the  true  course 

plant,  many  hundreds.  A  specialist  may  assist  the  line  workers 
in  one  or  many  respects.  Staff  men  may  be  installed  during  a 
reorganization  and  diverted  after  they  have  completed  their 
study  and  plans. 

While  similar  elements  are  of  course  present  in  any  system  of 
management,  the  spirit  of  the  factory  has  an  unusually  direct 
bearing  on  the  success  or  failure  of  the  line  and  staff  plan.  Co- 
operation between  staff  and  line  is  essential.  The  staff  needs  to 
have  the  firm  support  of  the  management ;  and  its  chief,  as  head 
of  improvement,  needs  to  be  in  close  understanding  with  the 
superintendent  of  production.  Staff  functions  often  are  not  cor- 
related. They  lap  over,  or  failing  to  meet,  leave  gaps  in  the 
program  of  improvement.  Criticism  or  suggestion,  moreover, 
frequently  tends  to  become  impractical ;  and  for  the  staff  not  to 
enjoy  the  support  of  the  line  is  likely  to  block  the  reform.  Hence 
the  importance  of  a  firmly  seated  chief  of  staff,  directing  all 
betterment  and  arbitrating  between  the  doer  and  the  advisor. 


36 ORGANIZING  FOR  PRODUCTION 

The  staff  men,  moreover,  require  unusual  resourcefulness  and 
tact.  Under  such  conditions  only  can  the  specialized  staff  get  at 
the  facts  with  which  to  work  and  the  line  take  full  advantage  of 
standards  which  the  staff  may  have  developed. 

FUNCTIONAL  MANAGEMENT  SEEKS  TO  STANDARDIZE  THE  ONE  BEST  WAY 
—TAYLOR'S  CONCEPTION  OF  CONTROL 

T  INE  and  staff  grew  naturally  out  of  the  limitations  of  the 
line  organization.  The  fact  is  that  it  rarely  proved  feasible 
to  secure  a  man  for  a  line  position  who  also  had  the  qualities, 
ability  and  opportunity  to  detach  himself  from  his  work  and 
study  out  better  methods.  At  best  he  is  likely  to  give  undue 
weight  to  the  difficulties  in  the  way  of  their  adoption;  and  to 
this  rule,  the  manager  himself  is  no  exception.  The  third  main 
type,  which  has  been  called  functional,  is  also  a  development  of 
the  more  scientific  approach  to  business  and  in  its  extreme  form 
attempts  to  put  operation  on  a  scientific  basis  throughout  the 
plant. 

As  stated,  the  relation  of  line  and  staff  to  line  organization  sug- 
gests itself  when  the  manager  asks  three  questions : 

(1)  "Why  are  we  doing  the  job  this  way?" 

(2)  "Is  there  a  better  way  to  do  it?" 

(3)  "How  can  we  work  out  this  better  and  more  economical 
way?" 

The  better  way  for  which  the  staff  is  to  search  may  still  be 
"rule-of  -thumb,"  or  highly  scientific  in  one  or  many  departments. 

To  apply  the  functional  system  of  management  as  conceived  by 
Frederick  "W.  Taylor  and  his  group  of  associates,  the  average 
manager  must  answer  in  the  affirmative  one  more  question.  ' '  Can 
I  determine  the  'one  best  way'  of  doing  each  piece  of  work  in 
my  factory  and  make  that  way  absolutely  standard  under  my 
working  conditions?"  Taylor  not  only  believed  this  possible, 
but  approaching  the  problems  of  production  as  a  scientist  with 
an  eye  to  results,  demonstrated  that  it  could  be  done. 

So  distinct  is  Taylor's  conception  of  the  unity  of  a  specialized 
system  of  organization  that  a  later  chapter  describes  in  detail 
how  the  Taylor  system  works.  For  purposes  of  comparison  it 
may  be  said  that  Taylor's  system,  while  adopting  the  common 


la  a  a  a  a  a  a  BB  a 


••ail  ••••»  ••••• 

§ae     •    11      •   •• 

s    • 

T  •  •  ••••••     I 

iaif  •••aim1 


»»        I 


El  1 


Committee  consideration  of  a  management  problem  is  shown  above — a  meeting  of  department  heads 

in  the  office  of  President  H.  L.  McClaren  of  the  Mitchell-Lewis  Motor  Company.     Below  appears 

the  unique  chart  board  used  at  the  Fierce-Arrow  Motor  Car  Company  to  indicate  the  division  of 

responsibility  in  that  organization 


Different  types  of  factory  "conning  towers"  are  here  shown.  Below,  the  general  foreman  of  the 
Gas  and  Electric  Company  of  Baltimore,  is  surrounded  by  recording  instruments.  Above  is  E.  St. 
Elmo  Lewis,  vice-president,  Art  Metal  Construction  Company  In  the  middle,  Chief  Engineer 
Doane  of  the  National  Lamp  Works  is  at  hi"  unique  desk,  which  is  cut  out  in  front  for  convenience 


PLANNING  THE  ORGANIZATION 39 

practice  of  tentative  standards  to  begin  with,  is  in  its  final  pro- 
posals rigidly  scientific.  It  not  merely  suggests  a  straightening 
of  the  most  serious  kinks  in  production,  but  hews  to  a  straight 
line  in  all  operations  (Figure  IX). 

True  Taylor  principles  and  methods  cannot  be  applied  piece- 
meal, and  their  success  depends  upon  the  whole  institution  from 
president  down  to  operative  being  "sold,"  or  won  over  to  the 
idea  that  their  aims  are  commercially  possible  and  practical,  and 
fundamentally  just. 

Any  organization — the  line  and  staff  or  even  the  line — may 
have  its  functions  logically  grouped.  Recent  line  and  staff 
organizations  are  effectively  subdivided  for  planning,  execution 
and  betterment.  But  the  functional  system  of  management  which 
is  usually  associated  with  Taylor 's  name,  is  further  distinguished 
by  three  points : 

(1)  As  originally  worked  out  in  complex  industries  it  carries 
specialization  of  duties  somewhat  further  than  the   other 
forms. 

(2)  The  main  division  of  work  is  divided  into  planning  and  exe- 
cution ;  and  the  staff  function  of  betterment  is  a  definite  part 
of  the  planning  function. 

(3)  The  individual  workman  does  not  look  to  one  foreman  for 
all  orders,  as  under  the  line  or  line  and  staff,  but  receives 
instructions  directly  on  different  aspects  of  the  operation 
from  several  so-called  "functional  bosses." 

All  activities  within  an  establishment  are  split  into  the  two 
groups :  planning  work  and  executing  work.  The  planning  end 
of  management  in  all  its  details,  critical  as  well  as  constructive, 
is  taken  over  by  a  planning  department.  The  executive  end  of 
management,  the  follow-up  and  disciplinary  functions,  is  given 
in  charge  of  a  group  of  functional  foremen,  who  serve  as  in- 
spector, repair  boss,  speed  boss  and  gang  boss  (Figure  X). 
Supervision  is  thus  specialized  no  less  than  operation.  The  head 
of  the  factory  works  out  his  policies  through  these  two  groups  of 
men.  He  or  his  head  foreman,  in  the  most  successful  functional 
systems,  constitutes  "line"  control  over  the  functional  foreman. 
A  well-planned  organization  of  this  sort  also  will  probably  free 
the  chief  from  detail  and  enable  him  to  act  with  perspective  as 


40 


ORGANIZING  FOR  PRODUCTION 


head  of  improvement  in  the  prime  points  of  organization  and 
policy. 

It  is  not  an  accident  that  functional  organization  was  first 
developed  in  the  machine-tool  industry.  In  a  simple,  elementary 
industry,  the  traditional  way  may  be  as  near  to  the  scientific 
method  as  the  manager  can  profitably  hew.  The  ideal  method 
often  threatens  to  cost  more  than  it  saves,  and  a  modified  func- 


Purchasing  and 
Other  Special  Service 
Departments 

1 

Superintendent 
of  Production 

1 

Chief 
of 
Staff 

Consulting 
Specialists 

Disciplinarian 

EXECUTION 


Time  Clerk 
Gats  In  the 

Cost  Data 


Gang  Boss 

Directs 


Boss 
Directs  Usa 


Repair  Boss 

Watches 
Conditions 
of  Work 


Quality- 
Inspector 


FIGURE  X:  In  a  functional  organization,  it  is  frequently  said,  every  workman  has  several  bosses. 
These  bosses,  however,  are  primarily  helpers,  who  relieve  the  operator  of  practically  every  planning 
and  operating  function  except  turning  out  the  product.  A  staff  of  betterment  specialists  is  frequently 
maintained  to  devise  new  standard  methods.  Bosses  and  workmen  alike  are  directly  responsible  to 
the  disciplinarian  for  adherence  to  instructions 

tional  scheme  is  accordingly  adopted.  Taylor  himself  states  that 
he  was  forced  to  subdivide  supervision,  because  foremen  capable 
of  both  planning  and  executing  in  intricate  production  work 
could  not  be  found  in  sufficient  numbers,  and  when  found  were 
too  valuable  to  be  left  in  foremanships.  So  it  is  in  complex  pro- 


PLANNING   THE   ORGANIZATION 41 

cessing,  where  the  planning  work  warrants  the  use  of  many 
staff  specialists  and  particularly  a  highly  developed  order  depart- 
ment, that  the  Taylor  plan  promises  most. 

Looking  at  functional  management  as  a  prospective  system 
of  organizing  his  establishment,  the  first  point  that  strikes  the 
average  manager  is  that  of  separating  even  the  routine  of  plan- 
ning from  execution.  Unless  he  has  some  conception  of  the  num- 
ber of  men  in  an  ordinary  line  organization  who  are  combining 
both  functions,  he  will  be  startled  at  the  force  of  planners  he  must 
segregate  in  this  department  when  he  applies  the  Taylor  scheme. 
This  first  view  of  the  planning  department,  unless  he  realizes 
how  many  "part- thinking"  and  "part- working"  jobs  there  are 
in  his  establishment,  will  bring  out  the  remark,  "What  a  tremen- 
dous overhead ! ' '  One  manager  was  startled  to  discover  thirty-five 
per  cent  of  the  productive  shop  force  enrolled  in  the  planning 
department.  Not  until  he  analyzed  the  situation  did  he  see  the 
reasonableness  of  what  at  first  looked  like  "more  clerks  than 
workmen."  As  a  matter  of  fact,  the  planning  was  a  large  part 
of  production. 

So  the  average  manager  who  would  apply  the  Taylor  system 
of  scientific  management  must  completely  revise  his  thinking 
about  the  relative  proportions  of  what  unfortunately  have  been 
termed  "productive"  and  "non-productive"  labor.  It  is  tradi- 
tional that  a  main  function  of  management  is  to  hold  down  the 
proportion  of  ' '  non-productive  "  to  "  productive ' '  labor.  Before 
a  manager  applies  the  basic  Taylor  principle  of  separating  plan- 
ning from  doing,  he  will  have  to  rid  himself  of  this  old  idea  and 
think  in  new  terms  of  the  so-called  "non-productive"  and  "pro- 
ductive" classes  of  work,  which  as  terms  ought  long  ago  to  have 
been  discarded. 

ENTRUSTING  ADVISORY  DUTIES  TO  COMMITTEES— THE  ROTATING 
COMMITTEE  AND  THE  UNIT  SYSTEM 

VARIATIONS  of  the  three  basic  ways  to  organize  are  of  course 
found  in  many  factories.  The  committee  form  of  manage- 
ment may  be  said  to  be  a  variant  of  the  line  and  staff,  in  which 
committees  made  up  of  line  department  heads  at  stated  intervals 
devote  time  to  special  studies  and  offer  definite  reports  on  broad 


42 ORGANIZING  FOR  PRODUCTION 

policies  affecting  the  organization  as  a  whole.  Such  committees 
are  sometimes  temporary,  and  sometimes  permanent.  They  may 
recommend  the  establishment  of  a  staff,  or  the  employment  of 
an  expert  on  some  problem.  They  are  successful  in  so  far  as  their 
chairmen  are  leaders.  They  belong  in  the  class  of  factory  organ- 
ization which  may  be  termed  "systematized"  rather  than  "scien- 
tific," and  have  advanced  industrial  practice  far  beyond  unsys- 
tematized  control. 

Often  the  committee  system  is  a  step  toward  a  more  definite 
line  and  staff  or  functional  type  of  organization.  The  principles 
of  this  system  were  perhaps  most  thoroughly  applied  in  the  devel- 
opment of  the  National  Cash  Register  Company's  organization. 
John  H.  Patterson,  the  president  of  the  company,  devised  the 
well  known  "pyramid  form"  of  organization  chart.  Mr.  Pat- 
terson conceives  that  heads  of  departments  and  executives  should 
depend  on  those  below  and  that  the  pyramid  from  base  to  top 
best  indicates  where  the  strength  of  an  organization  lies. 

Cooperative  effort  among  department  heads  and  among  de- 
partments is  developed  by  the  committee  system.  No  group  of 
department  heads  can  attend  planned  meetings  regularly  and  not 
discover  that  every  one  has  troubles  of  his  own.  Under  the  right 
leadership,  the  committee  plan  brings  to  a  fair  decision  differ- 
ences of  opinion  which  forecast  serious  friction. 

Under  the  committee  system  as  generally  organized,  the  com- 
mittees are  advisory  in  character.  The  factory  manager  heads 
the  general  factory  committee.  Individual  members  consist  of 
the  engineer  or  the  head  of  the  designing  department,  the  head 
of  the  tool  making  department,  the  foremen  of  the  different 
processing  departments  and  the  head  of  the  cost  department.  A 
stenographer  acts  as  secretary. 

Such  a  committee  may  discuss  and  appoint  acting  sub-commit- 
tees on  such  problems  as  how  routine  can  be  developed  to  push 
work  through,  how  to  reduce  costs  and  how  to  redesign  or  stand- 
ardize the  product.  In  one  plant  a  Monday  morning  foremen's 
meeting  toned  up  the  whole  routine  of  getting  work  done.  Not 
only  have  the  meetings  developed  team  spirit,  but  out  of  the 
suggestions  for  taking  up  lost  motion  between  departments,  a 
unique  follow-up  board  was  devised.  A  sub-committee  put  the 
results  of  the  Monday  morning  meetings  before  all  the  heads  of 


PLANNING  THE  ORGANIZATION 


43 


departments  and  provided  the  necessary  incentive  for  carrying 
out  the  decisions  of  the  meeting. 

Intense  specialization  sometimes  develops  lop-sided  executives 
in  both  line  and  staff  places — men  who  worship  tradition  and 
action,  to  the  exclusion  of  experiment  and  research,  or  the  con- 
verse. Against  this  danger,  the  study  of  betterment  problems  by 
line  men  fulfilling  staff  duty  on  committees  offers  relief.  Espe- 
cially if  the  membership  of  the  committee  changes  by  rotation 
will  mutual  understanding  and  a  company  viewpoint  be  fostered 
in  all. 

Another  type  of  organization  which  cannot  be  classified  directly 
under  line,  line  and  staff  or  functional  is  that  developed  by  Major 
Hine.  This  is  known  as  the  Unit  System.  It  is  in  a  way  a  com- 


How  the  Franklin  Automobile  Company  Divides  Its  Business  Activities 


General  Manager 

I 


Select 


Organize  and 


Finance 


Sell 


FIGURE    XI:    The  six  main  responsibilities  connected  with  a  thoroughly  organized  automobile 

manufacturing  business  are  here  shown,  with  the  mnemonic  symbols  used  to  represent  them  in  the 

company  records.     The  production  organization  is  further  charted  in  detail  (Figure  XII) 

bination  of  the  line  and  staff  principles  and  the  rotating  com- 
mittee principle  of  management.  Mr.  Hine  develops  the  army 
and  navy  idea  of  amalgamating  staff  and  line  functions.  He 
believes  that  "by  substituting  periodic  details  from  the  line  for 
permanent  appointments  to  the  staff,  an  ideal  organization  can 
be  developed." 

His  plan  has  been  applied  in  what  are  known  as  the  Harriman 
lines — the  Union  Pacific  and  Southern  Pacific  Railway  Systems. 
The  plan  separates  the  work  an  executive  does  from  the  definite 
title  for  that  work.  For  example,  instead  of  the  titles  "general 


-J4 


ORGANIZING  FOR  PRODUCTION 


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PLANNING  THE  ORGANIZATION 


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46 ORGANIZING   FOR  PRODUCTION 

superintendent,"  "superintendent  of  motive  power"  and  "chief 
engineer,"  each  such  man  under  the  general  manager  is  given 
the  title  "assistant  general  manager."  Each  of  these  men  in 
railway  work  knows  something  of  the  duties  and  authority  of 
the  others,  and  upon  the  elimination  of  artificial  barriers  between 
executives  set  up  by  titles,  the  whole  group  of  assistant  managers 
has  been  found  to  work  as  a  unit  in  the  discharge  of  its  particular 
function  on  the  road.  The  assistants  in  the  general  superintend- 
ent 's  office  exercise  their  functions  in  the  same  way. 

One  of  the  immediate  advantages  of  the  plan  in  railroading  is 
that  of  substituting  the  real  authority  of  the  assistant  manager 
in  charge  of  the  office  at  that  time,  for  the  petty  authority  of  the 
clerk  who  formerly  represented  the  assistant  in  his  specialized 
function  when  he  was  absent  and  signed  his  superior's  name  to 
something  for  which  he  as  a  clerk  was  not  responsible. 

If  there  is  any  one  leading  lesson  in  the  Unit  System  for  the 
average  manager  of  an  industrial  establishment,  it  is  insistence 
on  the  psychological  value  in  every  man  signing  his  name  for 
what  he  is  individually  responsible  and  nothing  more. 

Here  and  there  throughout  the  country  have  developed  other 
variations  of  the  three  general  systems.  Any  system  of  develop- 
ing suggestions  from  workmen  may  be  regarded  as  giving  every 
one  in  the  business  a  staff  or  planning  function.  The  "legisla- 
tive" scheme  is  also  in  successful  operation.  In  this,  much  the 
same  organization  appears  as  in  the  state  and  national  govern- 
ments. The  factory  is  planned  as  a  democracy.  The  executives 
form  a  cabinet  about  the  chief  executive.  The  department  heads 
are  organized  as  a  senate,  and  a  group  of  men,  one  elected  by 
perhaps  every  twenty  employees,  as  a  house  of  representatives.  A 
constitution  is  drawn  up  and  signed  by  all,  and  in  all  meetings, 
rules  of  order  and  the  majority  vote  prevail.  Inspiring  leader- 
ship and  a  fair  division  of  dividends — responsibility  and  incen- 
tive— incline  the  entire  body  of  employees  to  think  as  well  as  work 
for  the  business. 

It  may  be  said  of  many  organization  plans  that  they  class  as 
"hobbies"  of  the  men  who  are  responsible  for  their  success,  but 
do  not  contain  new  principles.  They  emphasize  again  the  vari- 
able human  factor  in  management,  and  illustrate  how  a  business 
grows  around  and  supplements  the  personal  qualities  of  its  head. 


PLANNING  THE  ORGANIZATION 47 

No  matter  what  the  form  of  organization,  the  main  point  in 
deciding  on  one  for  a  works  is  to  make  it  fit  conditions.  Prob- 
ably there  will  be  little  option — conditions  may  dictate  one  or 
another  form  beyond  question.  There  are  ideals  and  principles 
which  the  manager  may  adopt  as  his.  The  method  of  applying 
them  must  depend  upon  the  business,  the  manager  and  the 
employees. 

In  the  average  enterprise  the  first  organizing  or  corrective  step 
in  this  application  of  principles  which  the  manager  can  take  is 
to  classify  the  work  ahead  into  broad  groups  and  then  choose  the 
men,  determine  the  type  of  organization  most  fitting  for  himself, 
his  men  and  his  enterprise,  and  lay  out  the  duties  of  these  groups 
of  department  heads  and  employees  on  paper.  George  D.  Bab- 
cock,  Production  Manager,  Franklin  Automobile  Company,  in  a 
paper  before  the  Efficiency  Society,  has  summarized  such  a  gen- 
eral plan. 

All  the  business  of  the  company  under  the  general  manager  is 
split  into  six  groups  of  activities :  (P)  Selecting  the  Product,  ( C) 
Organizing  and  Maintaining  the  Company,  (F)  Financing,  (M) 
Manufacturing,  (S)  Selling,  (A)  Accounting  (Figure  XI). 

The  manufacturing  group,  designated  as  "M,"  splits  into  three 
divisions,  all  of  which  are  under  the  jurisdiction  of  the  works 
manager.  These  divisions  are  engineering,  producing  and  pur- 
chasing. As  Mr.  Babcock  explains,  the  form  or  method  of  this 
manufacturing  organization  is  not  necessarily  "lif table,"  or 
applicable  without  change  to  another  business.  It  indicates, 
however,  what  activities  the  organization  must  be  shaped  to  carry 
on  and  how  these  activities  are  logically  grouped. 

The  second  step  is  to  take  each  subdivision  of  the  three  main 
groups  and  outline  its  duties  and  responsibilities.  "With  the  Pro- 
duction Division  as  an  example,  this  analysis  of  duties  is  shown 
in  Figure  XII.  Again  it  should  be  recalled  that  these  lists  of 
duties  and  responsibilities  are  definitely  adapted  (as  they  should 
be)  to  the  turning  out  of  automobiles  at  the  Franklin  Company's 
factory.  But  the  general  plan  of  mapping  out  production  duties 
and  actually  applying  the  organization  principles  holds  true  for 
any  business,  and  whether  or  not  put  on  paper,  is  a  fundamental 
step  in  organizing  a  plant  or  bettering  present  conditions. 


Ill 

THE  SELECTION  AND  TRAINING 
OF  EXECUTIVES 


WHAT  makes  a  100%  man"  read  the  heading  on  a  sheet 
sent  to  the  department  heads  in  a  business.  Listed  on 
the  left  side  of  the  sheet  were  ten  qualifications  for  in- 
dividual efficiency.  Each  person  was  asked  to  vote  privately 
and  to  list  these  qualifications  in  the  order  of  their  importance, 
as  he  saw  it,  for  executives,  clerks  and  three  classes  of  labor.  The 
vote  is  tabulated  in  the  accompanying  chart  (Figure  XIII). 

Votes  of  nine  individuals  are  reproduced.  Not  least  interest- 
ing is  the  reflection  their  ballots  give  of  the  characteristics  of  the 
voters.  Compare  D's  vote  with  C's.  D  is  an  advertising  man- 
ager, C  a  credit  manager.  Compare  H,  the  vote  of  the  presi- 
dent of  the  company,  with  A,  that  of  the  general  manager.  One 
man,  trained  as  a  psychologist,  made  a  special  answer.  The 
only  woman  voting,  G,  acted  in  the  capacity  of  advisor  for  the 
women  of  the  company.  Her  vote  agreed  most  closely  with  that 
of  the  president. 

The  tabulations  explain  themselves  so  far  as  individual  concep- 
tions of  ability  go.  But,  more  important,  they  suggest  the  great 
difficulty  of  laying  down  rules  for  the  selection  and  training  of 
the  individuals  in  a  factory.  Even  after  the  organization  has 
been  planned  on  paper,  the  problem  of  finding  and  developing 
men  for  the  executive  places  is  one  of  the  most  difficult  in  busi- 
ness today.  The  training  of  workmen  is  now  an  accepted  rou- 
tine in  many  plants,  but  little  has  been  said  about  the  training 
of  executives.  "Where  can  I  find  right-hand  men?"  and  "How 
can  I  develop  them?"  are  questions  hundreds  of  managers  are 
asking.  A  factory  superintendent  in  a  New  England  town  said : 


MANNING  THE  ORGANIZATION 49 

"There's  just  one  man  in  the  shop  of  two  hundred  that  I  can 
rely  on  to  take  the  initiative  and  find  the  'bugs'  in  something 
that's  gone  wrong.  And  he's  getting  too  old/' 

This  superintendent's  problem  is  not  different  from  that  of 
other  heads  of  manufacturing  establishments.  Specialization  in 
organization  has  created  a  demand  for  specialized  men  that  can- 
not altogether  be  supplied.  Yet  this  problem  has  been  met,  and 
can  be  met  in  any  business.  Specialized  work,  specialized  plan- 
ning, specialized  supervision,  are,  as  Frederick  W.  Taylor  has 
explained,  an  effort  at  the  solution  of  the  even  more  difficult 
problem  of  securing  help ;  partly-rounded  executives  are  assigned 
parts  of  the  job  which  one  full-rounded  foreman  or  supervisor 
could  handle  alone. 

So  the  first  step  to  take,  as  one 'of  the  men  said  in  voting  on 
the  question,  "What  makes  a  100%  man?"  is  to  list  the  func- 
tions a  position  involves  and  then  classify  the  qualities  required. 
The  next  step  is  to  locate  and  determine  upon  men  who  fit  or  can 
be  trained  to  fit  these  different  positions 

HOW  A  BUSINESS  MAY  DEVELOP  ITS  OWN  EXECUTIVES  UNDER  AN 
INTELLIGENT  SYSTEM  OF  PROMOTION 

A  NY  business  is  a  school.  Some  are  better  schools  than  others, 
but  all  have  in  them  practically  every  essential  element 
needed  to  train  for  executive  positions.  The  prime  source  of 
department  heads  and  executives  in  a  going  plant,  therefore,  is 
the  organization  itself.  It  is  more  than  pleasant  theory  that 
men  should  be  developed  within  an  organization  and  not  taken 
from  the  outside.  So  doing  gives  the  selection  a  basis  of  ex- 
perience on  which  to  proceed,  and  capitalizes  the  training  the 
man  has  already  been  given.  Every  so  often  there  is  a  necessary 
exception  to  the  rule,  but  most  executives  agree  that  the  natural 
and  fair  way  is  to  develop  the  civil  service  idea  as  far  as  pos- 
sible within  a  business.  Where  exceptions  must  be  made,  care 
is  required  to  choose  a  man  who  fits  the  business;  otherwise 
neither  the  newcomer  nor  the  organization  can  profit  by  the 
relation. 

Curiously  enough,  comparatively  few  matured  methods  of 
training  executives  for  advancement  are  found  either  within 


50 


ORGANIZING   FOR  PRODUCTION 


or  without  a  business.  Directors  of  men  have,  in  general,  shown 
that  they  were  in  that  class  by  pushing  their  heads  above  the 
level,  in  spite  of  conditions.  After  all,  this  is  a  sound  test  of 
ability  and  perhaps  the  most  practical  and  fairest  way  of  know- 


How  Eight  Executives  Select  Men 


FIGURE  XIII:  How  eight  executives  rank  ten  personal  qualities  in  importance  for  an  executive, 
a  clerical  man,  and  three  grades  of  labor,  is  here  shown.  In  voting,  some  used  a  percentage  to  indicate 
the  importance  of  each  quality,  others  a  number.  Executive  D,  for  example,  ranks  "good  health" 
M  the  first  essential  in  an  executive,  and  "character"  as  tenth.  H  ranks  "character"  first,  and  "good 
health"  fifth.  The  vote  proves  how  widely  managers  differ  in  their  conception  of  ability 


MANNING   THE   ORGANIZATION 51 

ing  which  men  to  choose  for  the  heads  of  departments  and  the 
general  executive  branches  of  a  business. 

WISE  SELECTION  MAKES  THE  QUALITIES  OF  ONE  EXECUTIVE 
ROUND  OUT  DEFICIENCIES  IN  OTHERS 

"\\fHEN  it  comes  to  listing  qualifications  for  different  jobs, 

there  is  a  wide  difference  of  opinion.     In  the  end,  the 

manager  will  have  to  lay  out  a  scheme  of  selection  that  takes 

into  consideration  these  varying  viewpoints,  but  which  after  all 


WHAT   QUALITIES   THREE    AUTHORITIES    REQUIRE    IN   AN 
EXECUTIVE 

DR.  KATHERINE  BLACKFORD          WILLIAM  KENT  FREDERICK  W.  TAYLOR 

Keen  sense  of  justice  Education  and  special    Brains 
Courtesy  knowledge  Honesty 

Dependableness    (con-  industry  Education 

stancy,     reliability,  Aggressiveness  Judgment  or  common- 
uniform         disposi-  Health  sense 
tion)  Energy                              T&<* 
Courage  Initiative                          Special     or    technical 
Love  Tact                                        knowledge;   manual 
Teachableness  (ability  Personality                          dexterity        or 
to  learn  even  from  ^  degree  of  laziness          strength 
the  lowest  worker;                                              Energy 
openness  of  mind)                                                   Grit 
Tactfulness                                                                Good  health 
Sympathy  (ability  to 
appreciate  the  other 
man's  position) 
Understanding  of  hu- 
man nature 


FIGURE  XIV:      How  authorities  differ  in  their  estimate  of  the  qualities  essential  to  success  as  an 

executive  is  well  illustrated  by  this  tabulation  of  the  points  on  which  Blackford,  Kent  and  Taylor 

would  base  judgment 

must  be  more  or  less  arbitrary  if  it  is  to  come  within  reason- 
able limits  of  expense.  In  any  group  of  managers,  ask  the  simple 
question,  "What  is  an  executive?"  and  you  will  immediately 
get  a  diversity  of  opinion.  The  point  is  that  all  qualities  are 
relative  and  any  arbitrary  list  immediately  suggests  exceptions 
(Figure  XIV). 
Differences  of  opinion  as  to  what  constitute  executive  c.harac- 


52 ORGANIZING   FOR  PRODUCTION 

teristics  of  course  are  less  marked  as  the  matter  narrows  to 
more  specialized  positions.  A  factory  manager  in  Michigan  who 
wished  to  overhaul  his  shop  methods  and  devise  better  ones  chose 
out  of  his  own  force  a  young  mechanic  brimful  of  ideas  and  en- 
thusiasm, and  hired  an  associate  editor  of  a  technical  paper  to 
give  the  pair  "generalizing"  ability.  Those  two  men,  one  know- 
ing the  general  approach,  the  other  the  shop  policies,  tactics 
and  methods,  completely  rejuvenated  the  methods  in  that  plant. 
When  one  specialist  lacks  complete  balance,  to  match  another 
with  him  is  a  useful  device. 

For  many  classes  of  factory  work  the  trained  engineer  is 
proving  his  special  fitness  for  executive  positions.  Assistant 
superintendents,  designers,  plan  room  heads  and  special  staff 
men  of  all  classes  are  chosen  successfully  from  this  group  of 
prospects.  If  in  addition  to  trained  minds  and  special  knowl- 
edge they  have,  what  many  technical  men  lack,  imagination  and 
initiative,  they  will  not  stop  with  the  lower  executive  positions, 
but  may  be  relied  on  to  grow  to  fill  larger  capacities  in  a  man- 
ufacturing or  selling  organization. 

In  anticipation  of  the  usual  difiiculty,  a  Wisconsin  maker 
of  sanitary  ware,  foreseeing  the  necessity  of  replacing  his  super- 
intendent by  a  younger  and  more  energetic  man  with  a  broader 
and  more  scientific  viewpoint,  hired  a  young  engineer  graduate 
who  had  imagination  and  a  year  or  two  of  practical  experience 
along  efficiency  lines.  He  kept  him  at  this  same  sort  of  work 
for  several  years,  moving  him  from  operation  to  operation  until 
the  entire  round  had  been  covered.  Then,  one  day,  as  if  by 
no  intention,  the  young  engineer  was  put  in  charge  of  a  de- 
partment. He  is  succeeding  splendidly  and  it  is  only  a  ques- 
tion of  time  before,  again  as  if  without  design,  he  will  be  ad- 
vanced to  the  superintendency.  Some  day,  if  he  continues  to 
develop,  he  will  be  called  still  higher.  By  this  plan  of  starting 
well  qualified  men  young,  the  occasions  for  departing  from  the 
established  policy  of  filling  all  vacancies  from  the  ranks,  even  in 
the  case  of  the  highest  positions,  are  reduced  to  the  minimum. 

Men  in  one  department  or  one  business  of  course  cannot  be  all 
alike  in  characteristics.  A  good  organization  is  a  mixture  of 
types  of  men,  supplementing  one  another  and  their  chief.  Be- 
sides acting  as  a  superintendent  of  schools,  a  general  manager 


_  _  MANNING  THE  ORGANIZATION  _  53 

needs  to  be  a  good  cook.     The  greatest  and  best  output  comes 
when  the  recipe  of  men  is  right. 

HOW  TO  PICK  FOREMEN  AND  WHEN  TO  BRING  IN  OUTSIDERS 
ON  THEIR  MERITS 


"MEXT  to  finding  men  for  the  high  executive  offices  in  a  manu- 
facturing establishment  comes  the  problem  of  finding  a 
supply  of  foremen.  Probably  no  general  branch  of  management 
is  more  neglected.  The  foreman  in  the  average  line  organiza- 
tion (and  it  must  be  remembered  that  the  line  organization  is 
by  far  the  greatest  numerically  in  American  industries)  is  the 
choice  of  circumstance.  Good  foremen  are  vital  to  successful 
manufacturing.  In  the  average  plant,  the  foreman  is  discipli- 
narian, time  clerk,  master  mechanic,  follow-up  man,  plan  man 
and  general  executive  for  his  department.  In  the  newer  type 
of  organization  where  his  work  is  specialized,  the  choice  of 
foreman  becomes  simpler.  It  is  easier  to  take  an  intelligent 
workman  with  some  native  ability  in  handling  men,  and  fit  him 
to  a  special  task  than  to  choose  and  train  a  man  for  duties  which 
require  nine  or  ten  valuable  qualities  in  a  high  degree. 

How  to  choose  a  well-rounded  foreman  is  the  essence  of 
building  up  effective  executives.  The  manager  in  one  small 
shop  has  the  reputation  of  picking  men  from  the  ranks  with 
great  success.  His  plan  is  simple:  find  the  men  who  know. 
Whenever  the  head  of  a  department  is  absent  he  makes  a  point 
of  asking  questions  of  the  men.  Sooner  or  later  the  man  who 
measures  up  under  this  scrutiny  wins  a  foremanship. 

Merit,  of  course,  must  largely  be  the  basis  of  advancement 
in  any  case.  Length  of  service  needs  also  to  be  weighed,  but 
only  when  other  things  are  equal  may  it  safely  be  given  first 
consideration.  Nothing  could  be  more  dampening  to  enthusiasm 
than  to  make  seniority  the  chief  test.  On  the  other  hand,  it  is 
almost  equally  dispiriting  to  disregard  this  element. 

As  between  advancement  and  the  employment  of  an  outsider, 
also,  merit  must  be  the  chief  criterion.  However  excellent  is 
the  policy  of  filling  vacancies  from  the  ranks,  inflexible  adher- 
ence to  it  will  result  in  a  gradual  letting  down  all  along  the 
line.  Give  your  own  men  the  first  chance,  but  do  not  hesitate 


54 ORGANIZING  FOR  PRODUCTION 

to  introduce  new  blood  in  a  fair  way  if  the  issue  has  narrowed 
to  one  of  fitness  purely.  When  your  men  know  that  vacancies 
will  be  filled  in  this  way,  in  case  none  of  them  is  sufficiently 
developed  to  qualify,  they  will  be  stimulated  to  increased  en- 
deavor. Moreover,  it  pays  to  bring  in  a  new  man  occasionally 
for  the  sake  of  the  invigorating  reaction  of  a  fresh  viewpoint 
upon  the  atiriosphere  of  the  shop. 

Rarely  is  it  necessary  to  have  recourse  to  an  outside  supply, 
except  of  course  for  beginners  and  common  or  unskilled  labor ; 
and  as  a  rule  all  newcomers,  regardless  of  their  previous  ex- 
perience, should  start  at  the  lowest  level.  Prom  these  should 
come  the  semi-skilled  workmen,  and  from  this  class  the  skilled 
machine  operators  and  tool  makers.  Normally  in  turn  the 
skilled  class  should  furnish  the  foremen  and  other  responsible 
heads. 

LEADERSHIP  ABILITY  DIFFERENT  FROM  AND  MORE  IMPORTANT  THAN 
CRAFTSMANSHIP  IN  CHOOSING  FOREMEN 

OUT  because  a  man  is  an  excellent  workman,  it  does  not 
follow  always  that  he  will  make  a  satisfactory  shop  execu- 
tive. Every  advance  in  position  calls  into  play  new  qualities, 
for  which  the  candidate  must  stand  test  if  he  is  to  succeed. 
The  best  mechanics  often  make  the  poorest  foremen.  "We  pro- 
mote a  man  from  the  ranks  whenever  we  can,"  said  one  manu- 
facturer, "for  we  prefer  a  foreman  who  has  intimate,  practical 
knowledge  of  the  work  he  is  to  supervise.  Unfortunately,  how- 
ever, few  workmen  possess  the  qualities  essential  to  success  as 
foremen.  Leadership  ability  we  deem  more  important  than 
ability  actually  to  do  the  work,  for  a  bright  fellow  who  knows 
how  to  handle  men  will  soon  enough  learn  the  other  part  of  it. 
Therefore,  we  do  not  hesitate  to  go  outside  to  get  the  man  we 
want/' 

Often,  too,  a  workman  elevated  from  the  ranks  finds  his  old 
associates  jealous  or  unruly.  To  relieve  the  new  foreman  of 
this  handicap  one  manager  gets  his  foremen  from  other  depart- 
ments. For  instance,  he  took  a  high-grade  foundryman  and 
made  him  foreman  of  the  chippers  and  grinders.  For  his  chief 
product  inspector,  he  took  a  foundry  clerk ;  for  superintendent 


By  executive  conferences  such  as  these,  factory  problems  are  brought  to  a  profitable  solution.     Th» 
committee  meetings  shown  are  (below)  at  the  Buck  Stove  and  Range  Company,  St.  Louis;    (middle) 
the  foremen's  meeting  at  the  plant  of  the  Addressograph  Company,  Chicago;    and  (above)  a  con- 
ference about  the  topographical  map  at  the  Janss  Investment  Company,  Los  Angeles 


A  full  committee  for  the  consideration  of  sub-committee  reports  in  the  office  of  Hann  &  Kendall,  at 
Dallas,  appears  below.     In  the  middle  is  the  strategically  placed  office  of  the  foreman  at  the  Haw- 
thorne machine  shop  of  the  Western  Electric  Company.      Above  is  shown  a  student  under   the 
part-work,  part-study  plan  developed  and  established  in  Cincinnati 


MANNING  THE  ORGANIZATION 57 

of  factory  transportation,  he  took  a  checker  in  the  shipping 
room.  Occasionally  he  drafted  a  foreman  from  one  department 
for  service  in  another.  In  this  way  he  avoided  both  the  incubus 
of  familiarity  that  attaches  to  a  workman  elevated  to  the  f ore- 
manship  in  his  own  department  and  the  dispiriting  effect  that 
attends  the  bringing  in  of  a  total  outsider.  As  he  exercised 
rare  discretion  in  picking  his  men  for  their  leadership  qualities 
and  keenness  of  observation,  he  almost  never  scored  a  failure. 
An  unexpected  gain  incidentally  resulted.  Men  shifted  from 
an  initial  to  a  final  department  showed  greater  patience  with 
the  shortcomings  of  preceding  departments  and  were  more  con- 
structive in  their  criticism,  while  those  transferred  in  the  reverse 
direction  evinced  an  uncommonly  deep  interest  in  all  the  details 
of  the  work  that  affected  the  production  of  succeeding  depart- 
ments. A  higher  standard  of  workmanship  thus  was  promoted 
throughout  the  plant. 

This  same  expedient  often  is  equally  successful  with  respect 
to  positions  of  broader  executive  responsibility.  Every  promo- 
tion is  a  chance  to  round  out  a  lack  in  the  organization.  An 
Iowa  manufacturer  of  agricultural  machinery,  when  his  estab- 
lishment had  grown  so  large  that  he  felt  the  need  of  an  assistant 
to  himself,  called  to  the  post  the  sales  manager  of  one  of  his 
branch  offices.  He  did  this  in  lieu  of  promoting  his  superin- 
tendent, because  he  wished  to  have  more  of  the  sales  viewpoint 
impressed  upon  the  shop.  The  new  manager  was  handicapped, 
of  course,  by  his  lack  of  practical  experience  in  manufacturing, 
but  he  knew  what  constituted  a  salable  product.  Besides,  he 
was  possessed  of  a  keen  observation  and  no  little  executive  abil- 
ity, and  in  the  course  of  a  year  or  two,  under  the  careful  tute- 
lage of  the  president,  he  demonstrated  his  worth  completely. 

To  balance  his  organization  in  another  way  was  the  idea  of 
an  Ohio  metal-furniture  manufacturer  in  choosing  for  his  new 
general  manager,  to  have  direction  of  both  production  and 
sales,  his  shop  superintendent.  He  had  been  troubled  for  years 
with  a  flood  of  special  orders,  and  he  wished  to  have  one  in 
control  of  the  two  ends  of  the  business  who  had  a  vivid  appre- 
ciation of  the  effect  on  manufacturing  costs  of  promiscuous 
departures  from  standard.  The  new  executive  speedily  prow>d 


58  _  ORGANIZING  FOR  PRODUCTION  _  ^ 

his  value  by  training  the  sales  force  to  push  regular  lines  almost 
exclusively. 

Logically,  foremen  should  be  in  line  of  promotion  for  the  higher 
positions.  Workmen  are  much  more  commonly  fitted  for  fore- 
manships,  however,  than  foremen  are  qualified  for  larger  responsi- 
bility. For  one  reason  they  usually  lack  the  broad  outlook  requi- 
site, the  ability  to  keep  all  ends  in  view  and  to  keep  their  balance 
under  stress.  Again,  for  men  who  shall  have  general  direction 
of  work,  some  technical  qualifications  are  desirable  if  not  essen- 
tial. Foremen  heretofore  have  not  been  fortified  for  advancement 
in  this  respect.  For  the  higher  positions,  accordingly,  such 
sources  of  supply  as  are  not  decided  by  the  employment  of  young 
men  of  special  qualifications  must  of  necessity  be  largely  outside. 

But  the  demand  for  men  of  this  type  is  always  in  excess  of 
the  supply.  Full-fledged  superintendents  and  factory  man- 
agers are  not  often  found  foot-loose  and  free.  It  is  necessary 
as  a  rule  to  bid  for  the  service  of  such  men,  and  sometimes  to 
bid  high.  Even  then  it  may  be  impossible  to  get  the  man  you 
need  when  you  need  him.  Subdivision  of  duties,  with  personal 
assumption  of  the  apex-responsibility,  must  then  be  the  tem- 
porary resource.  When  men  cannot  be  found  for  your  pet 
scheme  of  reorganization,  the  scheme  must  be  fitted  to  the  men 
available. 

HOW  THE  PERSONALITY  OF  THE  HOUSE  MAY  BE  DEVELOPED 
AMONG  ITS  EXECUTIVES 


an  organization  has  been  manned  in  the  first  rough 
fashion,  comes  the  "continuous  performance"  of  training 
and  adapting  the  men  to  the  new  work.  Here  again  policies  of 
selection  and  training  lap  the  policies  of  organization.  Just  as 
the  work  is  most  effectively  done  only  when  the  type  of  organi- 
zation and  the  personnel  are  shaped  together,  so  the  organiza- 
tion once  started  has  certain  deep  characteristics,  which  are  to 
be  imparted  to  all  if  the  business  is  to  have  uniform  momentum. 
Business  houses  of  individuality  are  known,  well  or  ill,  by  the 
managers  they  keep.  Meet  two  department  heads  of  such  a 
company  and  no  matter  how  unlike  they  are  in  individual 
peculiarities,  they  will  have  a  certain  fundamental  personality 


MANNING  THE   ORGANIZATION 59 

in  common.  In  a  certain  organization  noted  for  its  development 
of  the  art  of  selling,  whether  you  meet  the  factory  superinten- 
dent or  the  sales  manager,  you  will  find  that  he  sees  the  product 
as  something  to  be  sold.  One  works  to  make  the  product,  the 
other  knows  the  inside  of  getting  people  to  buy  it;  but  both 
reflect  the  policy  of  the  house  that  asks  first,  "What  will  the 
customer  say  about  this?" 

Every  organization  has  this  house  spirit,  through  the  better 
part  of  which,  probably,  the  business  has  won  its  place.-  To 
correct  and  extend  this  esprit  de  corps  is  the  essence  of  the 
development  of  executives.  Not  only  must  men  be  placed  to 
balance  the  tangible  needs  of  the  business,  but  beyond  that  they  , 
must  fit  the  business  in  an  intangible  way  for  which  the  per- 
sonality and  intuition  of  the  manager  must  remain  responsible. 

Certain  of  the  activities  of  the  business  which  are  universal 
to  the  success  of  all  departments  furnish  a  training  for  the 
executives  out  of  which,  often,  this  company  personality  develops 
uncourted.  Take  the  very  homely  problem  of  filling  an  order 
on  schedule.  The  routine  involved  in  getting  the  work  done 
on  time  is  the  sum  of  the  totals  of  what  each  department  or 
branch  of  the  business  does  with  that  order.  One  manager,  seeing 
this,  immediately  started  foremen's  meetings,  not  only  to  facili- 
tate the  progress  of  the  work  but  to  train  his  foremen.  In  the 
broad,  balanced  study  of  this  everyday  problem  was  the  nucleus 
for  making  a  superintendent  from  one  of  the  foremen.  Properly 
planned,  such  meetings  offer  tomorrow's  executives  training  in 
policies  and  methods  which  otherwise  would  never  be  passed  on 
to  them,  except  by  hearsay  or  under  emergency  conditions. 

ENCOURAGING  TEAM  WORK  AND  INITIATIVE  BY  MEANS 
OF  SCHEDULED  SHOP  MEETINGS 

TV/f  ETHODS  of  handling  shop  meetings  are  many.  In  a  New 
York  manufacturing  establishment,  twenty  men  gather 
around  the  conference-room  table  with  the  manager  once  a 
week.  It  is  the  duty  of  each  of  the  twenty  to  write  the  general 
manager  a  letter  immediately  after  he  reaches  his  desk  every 
morning.  Each  of  the  twenty  letters  must  contain  at  least  one 
new  idea  about  the  concern's  activities. 


60 ORGANIZING  FOR  PRODUCTION 

The  letters  may  be  long  or  they  may  be  short — but  they  must 
be  written.  The  ideas  may  be  general  or  they  may  be  minute 
and  detailed — but  they  must  be  put  down  on  paper  daily.  And 
at  ten-thirty  each  week-day  morning  the  general  manager's  sec- 
retary hands  him  the  best  thought  of  twenty  picked  executives. 

An  electrical  manufacturing  company  in  the  Middle  West 
has  a  well  earned  reputation  for  loyal  and  efficient  lieutenants. 
Chief  among  the  methods  that  have  inspired  this  combination 
of  team-work  and  individual  initiative  is  the  reading  of  the 
mail  each  morning  in  the  office  of  the  general  manager. 

Every  incoming  communication  must  pass  under  the  scrutiny 
of  the  assembled  department  heads.  That  means  that  every 
phase  of  the  business  is  known  and  passed  on  by  every  executive. 
He  knows — he  helps — he  shoulders  his  share  of  the  responsi- 
bility. 

The  make-up  of  the  meeting  varies  but  little.  The  general 
manager,  as  reader  of  the  correspondence,  designates  who  shall 
handle  it.  This,  technically,  makes  him  the  leader,  though  his 
attitude  always  is,  not  "Do  this,"  but  "What  shall  we  do?" 
Ranking  thereafter  in  the  conference  come  the  chief  engineer, 
with  his  assistant ;  the  superintendent  of  works ;  and  the  technical 
correspondents.  These  make  up  the  council  proper.  As  an  aid, 
the  head  of  any  department  may  be  called.  To  this  group,  execu- 
tive in  function,  is  further  added  what  may  be  called  the  ' '  train- 
ing" group.  This  is  made  up  of  future  executives  or  road  men — 
men  who  must  get  the  house  view  as  quickly  as  possible  and  who 
are  often  valuable  consultants,  because  they  see  with  the  eyes  of 
a  former  competitor  or  from  the  analytic  viewpoint  of  the  man 
fresh  from  class  or  laboratory. 

WORK  IN  PLANNING  POSITIONS  MAKES  MEN  THINK  AHEAD 
OF  THEIR  PRESENT  JOBS 

/~\FTEN  a  department  may  exist  in  a  business  that,  because  of 
its  contact  with  all  other  departments,  is  a  natural  training 
ground  for  responsible  heads.  Unless  the  work  of  this  depart- 
ment is  too  specialized,  the  very  contact  of  the  men  with  the  entire 
establishment  will  give  them  opportunities  to  learn.  Order  and 
follow-up  men,  inspectors  and  instructors  have  unusual  oppor- 


MANNING  THE  ORGANIZATION 61 

tunities  to  get  the  ' '  management  view ' '  of  the  enterprise.  Such 
contact  may  be  supplemented  by  general  talks  on  factory  poli- 
cies and  methods.  In  one  large  manufacturing  establishment, 
a  complete  explanation  of  the  methods  and  management  of  the 
corporation  has  been  delivered  to  the  foremen  in  a  series  of  even- 
ing meetings.  Starting  with  the  forms  of  corporate  organiza- 
tion, the  lectures  developed  into  the  working  policies  in  handling 
the  factory  routine.  Such  detail  topics  as  standardization,  wage 
payment,  methods  of  figuring  costs  and  directing  production  were 


HOW  TO  HANDLE  AN  EXECUTIVE  MEETING 

Select  a  sub-committee  (to  include  secretary  and  chairman  ex-officio) 

to  plan  all  meetings. 
Have  this  committee  set  a  definite  time  and  announce  in  advance 

the  problems  to  be  considered. 
Begin  promptly. 

Have  secretary  on  hand  to  take  all  minutes. 
Have  sub-committee  present  order  of  business  at  call  of  chair. 
Confine  discussion  to  one  item  at  a  time. 
Get  each  man's  opinion. 
Limit  talks. 
Keep  procedure  informal  and  decide  questions  by  general  agreement 

whenever  possible. 

Where  opinion  is  divided,  put  question  to  a  vote  and  require  two- 
thirds  vote  to  pass,  or  have  someone  investigate  objections  and 

report  for  vote  at  next  meeting. 
Definitely  record  all  decisions. 
Have  someone  delegated  to  execute  decisions  and  report  progress  at 

each  meeting  until  matter  is  finished  or  reduced  to  a   definite 

routine. 
Have  decisions  neatly  typed,  signed  by  chair  and  secretary,  and  copy 

sent  to  each  as  soon  as  possible. 
Instruct  order-of -business  committee  what  it  shall  work  on  for  next 

meeting. 
Adjourn  on  schedule. 


FIGURE    XV:       Committee  meetings  have  a  reputation  for  wasting  the  time  of  executives,  yet 
they  are  so  conducted  in  some  plants  as  to  give  valuable  results.      Rules  by  which  the  maximum  of 
advice  and  action  can  be  secured  with  the  minimum  of  delay  are  here  given  as  they  have  been  de- 
veloped in  the  practice  of  many  companies 

also  discussed  in  the  most  practical  terms  by  the  works  engineer. 

A  more  carefully  directed  use  of  the  literature  of  the  trade  may 

well  form  another  basis  for  the  training  of  executives  within  an 

organization.     In  many  factories,  periodicals  and  technical  re- 


62 ORGANIZING  FOR  PRODUCTION 

ports  of  the  industry  are  routed  to  department  heads.  In  an 
Indiana  plant,  any  department  head  or  individual  workman  who 
distinguished  himself  was  awarded  a  trip  to  other  factories  to 
study  "the  other  man's  way."  Reports  and  discussion  based 
upon  such  reading  and  field  study  develop  men  and  enable  the 
manager  to  judge  them  shrewdly. 

Any  separation  of  planning  from  operating  in  the  work  of  a 
factory  makes  a  place  available  for  the  training  of  executives. 
If  a  man  can  profitably  be  released  from  routine  and  placed  where 
he  can  think  and  plan  in  a  specific  direction,  his  position  is  soon 
seen  to  be  a  natural  training  ground  for  greater  executive 
capacity.  Thus  certain  staff  men  in  a  line  and  staff  organization 
and  planning  room  men  in  the  Taylor  system  are  placed  in  an  illu- 
minating relationship  to  the  work  of  the  factory  as  a  whole. 
Routine  men  may  make  good  executives  and  routine  may  well 
be  a  part  of  the  training  of  every  executive.  But  routine  must 
not  rule.  The  man  away  from  routine  has  the  opportunity  to  see 
the  business  as  a  balanced  organism  and  to  grasp  the  subordi- 
nate importance  of  the  routine  in  its  true  relation. 

OUTSIDE  SOURCES  OF  TRAINING  AND  OF  MATERIAL 
FOR  EXECUTIVE  PLACES 

HEN  no  department  already  exists  for  the  natural  training 
of  executives,  special  departments  have  been  formed  in 
large  companies.  One  of  the  most  novel  systems  and  one  which 
combines  many  elements  of  different  systems  is  the  selecting  and 
developing  of  a  group  of  young  men  who  are  known  as  scouts. 
These  young  men,  working  in  all  the  ramifications  of  the  busi- 
ness according  to  a  broadly  planned  "course,"  become  under- 
studies for  different  main  executive  offices.  By  listing  the  requi- 
sites of  a  superintendent's  job,  for  example,  and  then  putting  a 
man  through  different  departments  with  his  final  work  in  mind, 
an  all-round  man  is  developed  to  fill  the  position. 

Corporation  schools  of  various  types  represent  an  important 
response  to  the  need  for  employees  trained  in  their  own  business 
home.  Notable  in  this  development  is  the  plan  of  the  American 
Telephone  and  Telegraph  Company,  the  "long-distance"  organ- 
ization of  the  telephone  industry.  Not  only  are  operatives 


MANNING   THE  ORGANIZATION 63 

trained  under  a  very  definite  plan,  but  normal  schools  to  stand- 
ardize the  work  of  the  instruction  staff  have  been  established. 

Here  and  there  in  the  United  States  the  business  man  is  co- 
operating with  the  public  schools  and  universities  to  train  men 
for  his  business.  At  Cincinnati,  the  Schneider  half-time  plan 
makes  possible  the  development  of  executives  with  a  broader 
point  of  view  than  they  would  have  if  their  training  were  kept 
within  the  walls  of  either  the  business  or  the  university  alone. 

Selected  students  at  the  University  of  Cincinnati  work  in  pairs. 
The  first  week  student  A  is  at  the  factory  which  has  agreed  to 
the  plan  and  student  B  is  at  the  university.  The  second  week 
student  B  takes  up  the  factory  job  where  A  left  it  and  A  takes 
his  turn  at  the  books.  Thus  the  manufacturer  can  plan  and 
receive  the  full  time  of  a  technical  student  and  at  the  end  of  the 
four  years'  course  can  have  two  men  who  should  have  the  mak- 
ing of  executives,  if  he  wants  them.  This  half-time  plan  has  its 
counterpart  with  detail  changes  in  several  other  cities.  Fore- 
men's clubs,  night  schools  and  Y.  M.  C.  A.  classes  also  offer  in- 
struction in  which  the  management  may  well  cooperate. 

Offices  of  consulting  management  engineers  have  of  late  proved 
live  sources  of  capable  executives.  The  training  young  engineers 
receive  as  installation  men  with  such  companies  gives  them  a  cos- 
mopolitan viewpoint  on  production  methods  in  general  and  a 
broad  knowledge  of  actual  conditions  that  is  hard  to  find  in  a 
man  trained  in  one  place. 

KEEP  THE  CURRENT  OF  PROMOTION  IN  THE  ORGANIZATION 
OPEN  AT  ANY  COST 

OYSTEMATIC  development  of  men  and  executives  involves 
expenditure ;  but  it  is  the  highest  type  of  insurance  upon  the 
enduring  vitality  and  the  growth  of  the  organization.  More- 
over, if  the  management  will  supply  hope  of  advancement,  the 
men  will  assume  most  of  the  burden  of  their  own  development. 
"The  one  thing  beyond  all  others  that  is  needed  for  success," 
declared  Frederick  W.  Taylor,  at  a  meeting  of  the  Efficiency  So- 
ciety in  1914,  "whether  it  be  the  success  of  the  worker  or  the 
success  of  the  intellectual  man,  is  hope.  In  order  to  give  hope 
you  must  first  of  all  have  in  your  mind,  in  the  bottom  of  your 


64 ORGANIZING  FOR  PRODUCTION 

heart,  the  welfare  of  your  men.  Scientific  management  does  not 
come  into  existence  until  the  owners  of  a  business,  all  those  on 
the  management  side,  have  the  development  of  their  men  as  abso- 
lutely the  first  thought  in  their  minds." 

Hope  demands  a  chance  at  all  times,  however,  and  men  often 
develop  faster  than  there  is  opportunity  for  their  advancement. 
"When  they  do,  it  is  a  healthy  sign ;  but  therewith  comes  a  com- 
plication of  the  manager's  problem.  Workers  who  are  too  good 
for  their  positions  are  the  most  difficult  of  all  to  keep  satisfied. 
They  are  like  a  stream  whose  waters  have  been  dammed  up 
and  must  have  outlet. 

Nothing  could  be  more  disastrous  to  an  organization  than  to 
have  it  looked  upon  as  a  mere  training  school  for  other  places. 
This  is  a  tendency  the  manager  must  rigorously  oppose — not  by 
tying  down  the  safety-valve,  but  by  interesting  himself  further 
in  his  men.  He  must  meet  the  problem  constructively  and  on 
the  aggressive.  Higher  pay,  better  working  conditions,  a  more 
advantageous  benefit  and  pension  plan  than  elsewhere ;  the  own- 
ership of  homes  in  the  vicinity;  profit-sharing;  opportunity  to 
become  stockholders — these  are  a  few  of  the  measures  that  have 
been  found  effective  in  holding  good  men.  Under  proper  poli- 
cies and  financing,  meantime,  the  business  may  be  made  to  grow 
with  the  development  of  its  men.  Beyond  this,  there  is  only  one 
way  to  meet  the  situation :  yourself  take  the  initiative  in  finding 
good  positions  elsewhere  for  those  who  have  outgrown  your  estab- 
lishment. This  is  a  policy  of  a  number  of  broad-minded  and  far- 
seeing  managers.  These  men  figure  that  it  pays  occasionally  to 
promote  a  man  outside — perhaps  to  a  position  where  he  is  a 
strategic  ally — in  order  to  keep  the  entire  organization  keyed  to 
the  highest  pitch. 


IV 


REORGANIZING 
UNDER  SCIENTIFIC  MANAGEMENT 


IF  there  is  one  factor  in  making  goods  on  which  American 
manufacturers  pride  themselves  above  all  others,  it  is  plant. 
We  "point  with  pride"  to  splendid,  glass- walled  buildings 
and  rows  of  intricate  special  machines.  It  takes  a  good  while 
for  the  edge  to  wear  off  of  "our  new  building"  or  "our  new 
machinery."  Good  buildings  and  superlative  equipment,  in  the 
mind  of  the  average  manager,  seem  the  symbols  of  success.  But 
this  satisfaction  in  permanent  improvements  has  its  dangers. 
There  is  a  chance  of  over-constructing  and  equipping  to  meet 
the  demands  of  a  busy  season,  only  to  let  the  buildings  and 
equipment  lie  idle  during  a  period  of  slack  orders. 

At  such  a  time  the  factory  manager  naturally  turns  to  a  study 
of  making  the  most  out  of  what  he  has.  In  sizing  up  the  rela- 
tion of  his  plant  to  his  business,  he  probably  will  find  that  he 
is  ahead  of  his  time  in  some  "hobby"  department  and  behind 
in  others.  Then  it  is  that  a  real  study  and  analysis  of  his 
methods  of  management  and  the  types  of  organization  already 
referred  to,  will  reveal  sources  of  loss  before  unconsidered. 

You,  for  example,  have  been  reading  about  the  successful 
application  of  "scientific  management,"  particularly  as  devel- 
oped and  practiced  by  Frederick  W.  Taylor  and  his  associates, 
to  the  manufacture  of  products  as  varied  as  pocket  handker- 
chiefs and  big  guns  for  coast  defense;  and  you  have  begun  to 
wonder  whether  it  might  not  accomplish  similar  results  in  your 
factory.  You  have  perhaps  heard  that  its  installation  is  costly 
and  that  labor  leaders  are  in  the  habit  of  "resoluting"  against  it. 
You  have  a  suspicion,  however,  that  it  would  not  continue  to 


66 ORGANIZING  FOR  PRODUCTION 

thrive  as  it  does  unless  there  was  something  substantial  to  over- 
come these  obstacles,  and  you  are  on  the  point  of  investigating, 
with  a  view  to  answering  your  own  question  in  regard  to  your 
own  plant  in  your  own  way. 

As  a  careful  investigator,  you  will  first  put  aside  all  hearsay 
and  get  in  touch  with  men  who  thoroughly  understand  the 
Taylor  system.  Then  you  will  visit  and  investigate  as  many 
plants  where  the  system  is  in  operation  as  you  think  necessary, 
especially  those  engaged  in  lines  of  manufacture  similar  to  your 
own.  You  will  talk  with  the  owners,  the  managers,  and  the 
workmen,  and  if  what  they  say  discourages  you,  perhaps  you 
will  stop  there. 

If,  however,  you  are  not  frightened,  you  will  next  try  to  secure 
the  services  of  one  of  the  managers  trained  by  Taylor  or  his 
associates.  If  a  real  Taylorite  is  available,  get  him  to  visit  your 
plant,  spend  a  day  or  two  looking  it  over  and  talking  with  the 
superintendents  and  foremen  and  yourself.  Ask  him  to  make  a 
report  as  to  what  is  necessary  to  be  done  and  what  it  will  cost 
to  develop  the  Taylor  functional  organization  for  you  and 
whether  the  probable  results  are  likely  to  justify  the  expenditure. 

When  you  get  your  report,  you  will  undoubtedly  find  that  it 
lays  the  greater  emphasis  upon  the  difficulties  rather  than  the 
advantages  of  the  Taylor  system.  It  will  point  out  to  you,  for 
instance,  that  if  you  are  manufacturing  a  comparatively  simple 
and  uniform  line  of  staple  products,  and  have  been  in  the  busi- 
ness for  many  years,  the  chances  are  that  you  have  already  syste- 
matized your  concern  to  a  comparatively  high  degree  and  that 
the  gains  to  be  expected  from  the  Taylor  system  may  not  be 
worth  much  more  than  the  cost  of  developing  it. 

On  the  other  hand,  if  you  are  manufacturing  a  wide  variety 
of  product  which  frequently  changes,  the  report  will  probably 
point  out  possibilities  of  saving  and  of  speed  in  the  manufacture 
and  delivery  of  product  which  will  strike  you  at  first  as  in- 
credible. 

In  any  case  it  is  sure  to  point  out  that  the  process  of  install- 
ing the  Taylor  system  is  a  costly  one.  While  it  is  impossible 
to  give  an  accurate  estimate  without  knowing  all  the  details  of 
the  present  and  future  development  of  the  business,  it  is  safe 
to  say  that  in  a  concern  employing  one  thousand  operators  the 


SCIENTIFIC   MANAGEMENT 


67 


Reorganizing  under  the  Taylor  System 


Decide  You  Really  Want  It 


He  Sets  Your  Men  or  Specialists  at  Work- 


Analyzing 
Orders 


Studying 
Arrangement 
of   Machines 

and  Work 


SOL 


Charting  Ways 


Checking  Up 


On  Basis  of  This  Study  Consultant  Locates  and 
Organizes  Planning  Department  Which- 


Starts  New  Stores  System 


Starts  Order  Plan  Boards  and  Schedules 


Starts  Route  Charts 


Starts  Standardizing  Conditions  and  Making  Time 
Studies  In  One  Chosen  Department 


Starts  New  Wage  Payment  Plan  In  Same  Department 


Begins  6e 

neral  Application  of  the  System  to  Entire  Plant 

FIGURE  XVI:   Changing  the  habits  of  an  organization  is  slow  work,  anj  requires  tenacity  of  pur- 

pose.     The  sequence  of  the  principal  steps  in  reorganizing  under  the  Taylor  system  is  here  shown 

and  (arrows  at  the  left)  the  time  required  to  establish  each  reform  in  an  average  plant 


68 ORGANIZING  FOR  PRODUCTION 

system  work  alone,  not  including  alterations  of  buildings  and 
equipment,  will  cost  at  least  ten  thousand  dollars  a  year  for 
eighteen  months  or  two  years.  It  is  a  safe  guess  that  necessary 
alterations  will  cost  another  ten  thousand  the  first  year.  You  are 
also  given  to  understand  that  you  are  not  to  look  for  any  result 
other  than  trouble  for  the  first  year  and  a  half,  and  that  the 
worst  trouble  is  apt  to  strike  you  just  about  the  time  you  think 
things  are  going  best  (Figure  XVI). 

The  difficulty  comes  not  with  the  workmen,  as  you  may  be 
thinking,  but  with  yourself.  You  undoubtedly  believe  when  you 
decide  to  begin  that  you  are  prepared  to  stand  a  steady  outlay 
for  a  year  without  looking  for  returns,  but  after  six  months  of 
it  you  begin  to  get  troubled. 

One  thing  that  the  scientific  manager  will  explain  to  you  in 
advance  is  that  you  have  to  develop  the  new  system  and  install 
it  gradually  without  in  the  meantime  ceasing  the  operation  of 
the  old  system  and  without  interfering  with  production.  This 
is  a  rather  difficult  task,  and  one  whose  magnitude  is  rarely 
appreciated. 

It  is  possible  to  maintain  production  under  the  old  method 
and  gradually  work  in  the  new,  and  it  has  been  done,  but  it  is 
far  from  easy. 

If  your  investigation  and  the  scientific  manager's  report  lead 
you  to  think  that  you  want  the  Taylor  system  in  spite  of  the 
difficulties  (and  you  will  have  found  by  that  time  that  labor 
difficulties  are  a  myth)  you  will  have  another  session  to  decide 
on  the  best  way  to  go  ahead. 

TAKING  THE  FACTORY'S  MEASURE  FOR  NEW 
METHODS  OF  WORK 

T1  HE  first  thing  the  investigator  will  recommend  is  that  you 
confine  your  attention  for  a  period  to  some  one  depart- 
ment of  your  plant  which  is  a  fair  unit  in  itself.  Systematize 
this  first,  not  only  to  make  your  experiment  on  a  limited  scale 
at  the  beginning,  but  more  especially  to  enable  you  to  train  a 
picked  group  of  your  best  men  in  the  details  of  the  Taylor 
system  as  adapted  to  your  plant  under  the  direction  of  a  Taylor 
expert.  When  the  job  is  successfully  accomplished  for  that  de- 


SCIENTIFIC   MANAGEMENT 69 

partment  and  you  have  determined  to  extend  it  to  the  rest  of  the 
plant,  you  will  then  have  your  own  force  of  experts  on  hand. 
For  you  understand,  of  course,  that  the  Taylor  group  has  no 
corps  of  experts  that  it  lets  out  to  you.  The  Taylor  man  comes 
alone,  or  at  the  most  with  one  assistant,  and  trains  your  own 
staff  so  that  when  he  leaves,  the  system  does  not  go  with  him. 

As  soon  as  the  scientific  management  staff  is  selected,  the 
expert  will  start  your  men  on  several  jobs  at  once.  One  of  the 
first  of  these  will  be  an  analysis  and  classification  of  the  orders 
you  get,  with  reference  particularly  to  the  time  allowed  for 
delivery,  the  practicability  of  carrying  your  product  or  parts 
of  it  in  stock,  and  the  possibility  of  combining  numerous  orders 
for  the  same  or  similar  things  on  one  manufacturing  order. 
This  analysis  will  probably  show  that  at  least  seventy-five  per 
cent  of  your  orders  are  rush.  It  will  be  somebody's  business  to 
find  out  which  of  these  really  are  rush,  so  that  the  expert  may 
plan  the  development  of  the  system  with  reference  to  its  real 
needs.  Here  again,  of  course,  you  must  understand  that  the 
Taylor  system  is  not  something  which  can  be  lifted  bodily  from 
one  plant  and  fitted  bodily  into  another.  It  is  a  set  of  prin- 
ciples of  universal  application,  but  the  mechanisms  thereof  have 
to  be  adapted  to  each  particular  case. 

Another  of  your  men  will  be  set  to  studying  the  arrange- 
ment of  machines  and  work  places  in  your  plant,  and  the  devel- 
opment of  a  layout  which  will  reduce  unnecessary  travel  to  an 
absolute  minimum.  This  new  layout  cannot,  of  course,  be  put 
into  effect  immediately,  but  it  should  be  established  as  an  ideal 
toward  which  all  necessary  changes  in  the  plant  shall  tend. 

A  third  man  will  be  put  to  work  studying  your  stores  system. 
It  will  be  his  business  to  determine  what  storage  facilities  you 
need,  what  materials  should  be  carried  and  in  what  quantities, 
and  the  proper  method  of  storing,  moving  and  accounting  for 
them.  In  nine  cases  out  of  ten  this  study  will  reveal  the  fact 
that  you  have  not  provided  sufficient  storage  space  for  the  proper 
handling  of  raw  materials,  and  still  less  for  the  proper  storage 
of  partly  finished  product  and  of  materials  in  process.  It  will 
also  show  usually  that  you  are  carrying  too  much  of  some  mate- 
rials, thus  tying  up  capital  unnecessarily,  and  not  enough  of 
others,  so  that  you  run  out  of  what  you  need  just  when  you 


70 ORGANIZING  FOR  PRODUCTION 

want  it  for  a  manufacturing  order.  It  will  also  show  that  you 
are  using  several  grades  of  materials  for  the  same  purpose, 
when  one  is  the  best  and  therefore  the  cheapest.  Your  inven- 
tory of  stores,  if  you  have  one  now,  will  likewise  have  been 
shown  to  be  quite  untrustworthy. 

The  stores  problem  is  in  most  cases  a  serious  one  and  must 
be  worked  out  and  satisfactorily  started  before  the  other  things 
the  Taylor  system  calls  for  can  really  be  undertaken.  While 
your  storerooms  are  being  rearranged,  standard  racks  and  bins 
introduced  and  your  trucking  standardized,  your  materials  will 
be  standardized,  classified  and  symbolized  in  accordance  with 
the  Taylor  system  for  easy  handling  of  the  stores  accounts,  and 
at  the  same  time  the  necessary  forms  will  be  in  process  of 
drafting  and  printing.  The  stores  department  is  the  beginning 
of  the  manufacturing  process,  and  one  thing  that  a  Taylorite 
never  ceases  to  hammer  in  is  the  fact  that  no  matter  where  you 
commence,  you  can  only  begin  at  the  beginning. 

Still  another  of  your  men  will  begin  analyzing  your  product, 
making  charts  to  show  exactly  what  material  and  how  much  of 
it  goes  into  each  of  your  products,  in  what  order  the  various 
parts  of  the  products  should  be  made  and  assembled,  the  types 
of  machines  and  work  places  through  which  they  should  go,  and 
the  operations  to  be  performed  upon  them  on  their  way  through. 
The  preparation  of  these  route  charts,  as  they  are  called,  will 
keep  the  best  man  you  have  busy  for  some  time,  while  the  stores 
system  is  being  straightened  out.  These  charts  are  an  indis- 
pensable prerequisite  to  the  establishment  of  the  routing  system, 
without  which  the  task  wage  payment  plan — the  keystone  of  the 
Taylor  system — cannot  be  made  to  operate. 

About  this  time,  also,  as  the  farmer's  almanac  says,  you  should 
look  out  for  trouble  in  your  maintenance  department.  You 
probably  already  have  such  a  department  in  name,  whose  busi- 
ness it  is  to  repair  breakdowns.  The  Taylor  system  requires 
that  the  chief  emphasis  be  laid  on  preventing  breakdowns,  and 
involves  therefore  thorough  and  systematic  inspection  and  the 
prompt  replacement  or  repair  of  damaged  parts  before  the 
breakdown  occurs.  It  takes  some  time  to  get  this  properly 
going,  and  so  you  may  as  well  begin  it  early. 

You  may  be  wondering  why  nothing  has  been  said  about  a 


__ SCIENTIFIC   MANAGEMENT 71 

cost  system.  Some  systematizers  begin  with  the  cost  system — 
and,  sad  to  relate,  end  there.  Conditions  must  be  brought  to 
standard  before  costs  can  be  established  and  controlled.  What 
the  Taylorite  is  after  is  more  and  better  production  at  less  cost 
of  money  and  effort.  He  is  glad  if  the  cost  system  of  whatever 
sort  reflects  this  result,  and  he  has  a  cost  system  all  his  own  if 
anybody  insists  on  having  it,  but  as  a  rule  he  does  not  bother 
about  starting  it  until  he  has  other  and  more  direct  and  important 
measures  well  established.  This  assumes,  of  course,  that  you 
already  have  a  cost  system  sufficient  to  keep  you  off  the  rocks 
for  the  time. 

These  jobs  may  be  going  on  in  any  kind  of  office  or  cubby- 
hole large  enough  to  house  the  men  on  them.  The  administra- 
tion of  the  Taylor  system,  however,  requires  a  properly  equipped 
planning  department,  and  when  your  preliminary  studies  have 
gone  far  enough,  a  place  in  your  plant  must  be  selected  for  the 
planning  department  and  the  necessary  equipment  provided. 
This  may  be  from  two  to  six  months  after  the  work  has  begun, 
depending  on  the  complexity  of  the  business. 

HOW  THE  FIRST  DEPARTMENT  MAY  BE  "BROKEN  IN" 
TO  THE  SCIENTIFIC  METHOD 

A  S  soon  as  your  planning  department  is  ready  you  will  grad- 
ually get  your  stores  ledger  going,  entering  item  by  item 
on  the  balance  sheets,  as  they  are  called,  and  relocating  each 
item  at  the  same  time  in  its  proper  place  in  the  storeroom.  Each 
item  thus  starts  from  an  actual  count,  and  it  only  remains  to 
keep  the  balance  sheets  right  and  quantities  shown  by  the  sheets 
properly  checked  up  with  the  quantities  actually  on  hand  in 
the  storeroom.  Not  the  least  of  the  advantages  of  this  plan  is 
that  it  obviates  the  necessity  of  a  shut-down  for  annual  inven- 
tory. This  sounds  easy,  but  it  is  not. 

Perhaps  the  most  conspicuous  feature  of  your  new  planning 
department  will  be  the  order  board.  This  planning  board  is 
intended  to  show  the  exact  status  of  all  orders  you  have  in  work. 
A  ticket  representing  each  order  in  process  at  each  work  place 
is  to  be  placed  on  the  plan  board  under  the  symbol  for  the  work 
place.  Also,  all  jobs  ahead,  for  which  the  materials  have  actu- 


72 ORGANIZING   FOR  PRODUCTION      

ally  been  delivered  at  the  machine,  will  be  presented  under  the 
same  symbol.  All  the  orders  you  have  in  the  factory,  further- 
more, whether  now  ready  for  processing  or  not,  will  show  on  the 
planning  board.  The  chief  function  of  this  board  is  not  merely  tc 
keep  everyone  posted  as  to  the  progress  of  work,  but,  what  is 
more  important,  to  insure  that  there  will  always  be  work  ahead 
at  every  machine  and  work  place  in  order  to  prevent  unnecessary 
delays  and  waiting  by  the  operators  between  jobs.  Another 
important  function  of  the  board,  with  the  aid  of  an  order  of 
work,  is  to  control  the  sequence  in  which  orders  will  be  started 
and  run  through  the  shop,  so  that  proper  relative  attention  may 
be  given  to  emergency  orders,  rush  orders  and  just  plain  orders. 
To  get  this  board  running,  all  the  information  put  down  by 
your  best  man  on  the  route  charts  in  regard  to  the  manufacture 
of  each  of  your  products  must  be  transformed  into  route  sheets, 
by  which  the  progress  of  each  specific  order  is  checked ;  into  an 
operation  order  for  each  operation,  by  which  the  sequence  of 
operations  is  controlled ;  into  inspection  orders  by  which  the  in- 
spection is  taken  care  of ;  into  identification  tags  to  go  on  mate- 
rials in  the  various  stages  of  progress;  and  into  move  orders 
to  move  the  materials  when  required  from  storeroom  to  machine 
and  from  one  process  to  another.  This  means  organization  of 
the  routing  function  with  its  route  clerks,  tag  clerks,  order- 
of-work  clerks,  recording  clerks  and  window  clerks,  through 
whom  the  plans  made  in  the  planning  department  are  trans- 
mitted in  the  form  of  orders  to  the  shop.  It  also  means  develop- 
ment of  the  specialized  supervision  known  as  functional  fore- 
manship,  by  which  the  old  foreman's  job  is  divided  among  (1) 
forwarders,  or  gang  bosses,  who  see  that  work  is  kept  moving 
properly  to  and  from  machines,  and  that  operators  are  doing  the 
job  ordered  by  the  planning  department;  (2)  inspectors,  who  are 
responsible  for  quality  of  work;  (3)  repair  bosses,  who  look  out 
for  the  condition  of  machines  and  work  places ;  (4)  instructors,  or 
machine  bosses,  who  train  operators  in  the  methods  developed  in 
the  planning  department;  and  (5)  move-men  to  keep  the  mate- 
rials on  the  move.  All  these  functional  foremen  must  be  trained 
in  the  conception  that  they  are  servants  rather  than  bosses  of  the 
operators,  and  they  must  have  this  idea  pretty  firmly  established 


Committee  sessions  in  the  office  of  Hoggson  Brothers,  New  York  (above),  and  at  the  plant  of  the 

Addressograph  Company  are  here  shown.     On  the  table  in  the  latter  conference  is  a  card  which  reads 

"Give  and  Get  Suggestions."     At  the  right,  above,  President  Upham  of  the  Consumers'  Company, 

Chicago,  appears  before  a  map  on  which  are  indicated  the  local  distributing  branches 


KG. 


SCIENTIFIC   MANAGEMENT 75 

before  you  will  get  any  results  from  the  order  board  in  the 
planning  department. 

You  will  doubtless  begin  to  route  the  easiest  orders  first.  For 
the  first  month  or  two  the  routing  system  will  seem  so  easy  that 
you  wonder  what  the  manager  was  talking  about  when  he  pre- 
dicted difficulties,  but  this  is  an  illusion  due  merely  to  the  fact 
that  you  do  not  expect  anything  of  it  during  that  time.  You  will 
find  half  your  orders  going  through  the  new  way  and  half  the  old 
way,  and  the  rest  undetermined.  After  the  system  has  run  four 
or  five  months  and  you  are  wondering  what  it  is  going  to  accom- 
plish, you  will  begin  to  tighten  up  on  it  and  then  you  will  find 
that  the  entire  process  is  only  beginning  to  be  understood  by  the 
people  in  the  planning  department  and  in  the  shop  and  that  it 
has  been  running  easily  only  because  it  has  not  been  expected  to 
work. 

The  best  way  to  find  this  out  is  to  make  time  studies,  stand- 
ardize the  conditions  under  which  the  operator  should  work  in 
order  to  earn  his  efficiency  reward,  and  then  attempt  to  apply  the 
efficiency  payment  idea.  That  little  requirement  of  standardized 
conditions  will  immediately  bring  out  the  fact  that  your  stores 
system  is  not  working  half  so  well  as  you  thought  it  was,  that 
the  moving  is  anarchistic  and  that  the  routing  has  only  got  to 
the  point  where  it  discovers  what  difficulties  it  is  up  against.  You 
will  then  jump  to  bring  your  stores  and  routing  systems  up  to  a 
point  where  they  are  really  understood  by  all  and  made  to  work 
exactly  as  intended,  and  here  the  real  Gehenna  is  entered. 

This  is  where  the  system  man  puts  in  eight  days  a  week,  to 
say  nothing  of  nights,  and  the  entire  staff  working  on  the  system 
in  the  factory  follows  suit.  You  and  the  superintendent  wonder 
what  it  is  all  about  and  decide  that  you  had  better  begin  to  find 
out  yourself  what  is  going  on.  If  you  really  take  the  trouble  to 
find  out,  you  will  get  into  the  game  and  push  it  through  to  a 
conclusion;  and  if  you  do  not,  you  are  likely  to  give  it  up  as 
hopeless,  provided  your  people  will  let  you.  The  chances  are 
that  they  by  this  time  have  caught  the  virus  and  you  will  find 
that  even  if  you  wanted  to,  you  could  not  go  back  to  the  old 
system.  But  if  you  have  the  right  stuff  in  you,  you  will  not  want 
to;  and  the  combined  energies  of  yourself,  your  assistants  and 
the  system  man  will  pull  you  through  the  critical  period  with  the 


76 ORGANIZING  FOR  PRODUCTION 

stores  system  and  the  routing  system  working  as  well  as  they  can 
be  expected  to  work  without  the  change  in  your  wage-payment 
methods. 

The  thing  that  ties  up  the  Taylor  system  and  all  its  details 
is  the  task  idea.  It  works  something  like  this :  You  select  one  of 
your  best  workmen  for  training  as  a  time-study  man  and  turn  him 
over  to  the  Taylor  man  for  instruction.  He  is  trained  in  the 
analysis  of  jobs  into  their  elementary  operations  and  in  the  use 
of  a  stop-watch,  and  then  begins  time  studies  on  some  operation 
near  the  beginning  of  the  entire  process.  The  elementary  time 
study  immediately  reveals  inefficiencies  of  machine,  power  and 
administration.  These  are  remedied  and  the  time  study  proceeds 
under  new  conditions.  Further  study  shows  the  possibility  of 
greatly  improved  methods  of  operation.  These  are  developed  and 
the  workman  trained  in  them  and  a  new  time  study  is  made  on 
the  basis  of  the  new  standardized  conditions. 

These  studies  are  worked  up  with  the  proper  allowance  for 
fatigue,  and  unavoidable  delays,  and  a  time  is  set,  in  which  each 
job  should  be  accomplished  in  order  to  earn  the  efficiency  reward. 
The  workman  gets  his  ordinary  wages  if  he  fails  to  do  the  job  in 
standard  time,  and  if  he  does  it  in  the  time  set,  he  gets  a  bonus 
in  addition  to  his  wages,  amounting  to  twenty-five  or  thirty  per 
cent. 

In  order  for  the  workman  to  earn  his  reward,  all  the  conditions 
must  be  right.  The  right  job  must  be  sent  to  the  operator  at  the 
right  time,  the  materials  must  be  on  hand  in  sufficient  quantity 
and  of  the  proper  quality,  the  machines,  equipment,  tools  and 
power  must  be  in  the  standard  condition  required  by  the  time 
study,  the  workman  must  be  properly  instructed  in  what  he  is 
to  do,  and  he  must  have  assurance  that  the  task  is  properly  and 
reasonably  set  and  that  his  day  wages  and  bonus  rate  are  guar- 
anteed against  cutting.  In  the  failure  of  any  of  these  conditions, 
the  task  cannot  be  accomplished  and  the  workman  cannot  earn 
his  bonus. 

Once  the  bonus  has  been  earned,  however,  you  will  find  that 
the  workman  "cries  for  it,"  and  he  is  apt  to  make  himself  pretty 
definitely  heard  if  the  conditions  are  not  kept  up  to  the  standard 
required.  As  a  result,  once  the  new  payment  plan  is  started, 
everybody  becomes  responsible  for  everybody  else's  success,  and 


SCIENTIFIC   MANAGEMENT 77 

you  get  a  general  toning  up  all  along  the  line.  For  this  reason 
it  is  advisable  to  start  the  task  and  bonus  as  early  as  possible,  even 
before  all  the  conditions  are  such  that  it  can  be  made  to  work 
successfully  and  permanently. 

This  requires  a  great  deal  of  care  and  judgment  to  avoid  delay- 
ing too  long  on  the  one  hand,  and  starting  in  too  soon  on  the 
other.  The  truth  is  that  whenever  you  start  you  will  find  that  it 
cannot  be  made  to  work  at  first;  but  there  is  an  advantage  in 
beginning  at  that  point,  inasmuch  as  the  start  shows  you  why  it 
cannot  be  made  to  work  and  you  have  an  inducement  to  set  about 
to  remedy  the  faulty  conditions  which  obtain. 

As  soon  as  you  begin  to  see  daylight  through  your  stores  and 
routing  systems  you  are  in  position  to  push  vigorously  the  exten- 
sion of  the  wage-payment  reform,  and  from  that  time  you  have 
your  troubles  on  the  run.  Not  that  the  job  is  finished  at  this 
stage,  by  any  means.  Scientific  management  is  never  finished, 
for  the  reason  that  you  never  have  time  the  first  time  over,  to  go 
as  far  as  you  know  you  should  go  to  get  the  best  results.  Your 
best  policy  is  to  go  over  the  entire  department  and  all  the  opera- 
tions in  it  and  set  your  tasks  and  get  them  going,  even  if  roughly, 
with  the  assistance  of  the  outside  expert.  By  the  time  this  is 
done  you  will  be  getting  substantial  results  in  the  way  of  greater 
certainty,  speed,  better  quality  and  reduced  cost,  and  your  own 
force  will  have  become  pretty  thoroughly  trained  in  their  new 
duties. 

This  should  be  the  case  two  or  two  and  a  half  years  after  you 
have  begun.  By  that  time  you  are  ready  to  extend  the  work  to 
other  departments.  This  can  be  done  by  your  own  force,  with 
only  very  occasional  help  from  the  scientific  manager. 

There  are  thousands  of  details  which  have  not  been  mentioned. 
What  has  been  attempted  is  to  advise  the  manager  who  is  think- 
ing of  developing  the  Taylor  system  of  scientific  management  in 
his  plant  how  to  go  about  it  to  make  up  his  mind  in  the  first  place, 
and  in  the  second  place,  if  he  decides  to  do  it,  what  changes  he 
is  to  look  for  and  about  the  length  of  time  that  he  should  expect 
them  to  take. 

No  attempt  has  here  been  made  to  paint  a  rosy  picture.  Scien- 
tific management  accomplishes  wonderful  results;  but  these  re- 
sults cost  time  and  money,  and  they  are  not  for  the  man  who 


78 ORGANIZING   FOR  PRODUCTION 

is  looking  for  three  hundred  per  cent  increase  in  three  months. 

Scientific  management  demands  not  only  time  and  money,  but 
patience  unlimited,  perseverance  and  grit,  and  above  all,  fairness 
and  justice  and  a  willingness  to  share  the  results  with  the  work- 
men, without  whom  they  could  not  in  the  least  be  accomplished. 

In  other  words,  it  is  only  for  the  ablest,  most  far-sighted  and 
fair-minded  managers.  The  question  whether  you  will  have  the 
Taylor  system  of  scientific  management  or  not  depends  at  least 
partly  upon  your  own  qualifications. 


I*A 


Part    II 

ESTABLISHING 

STANDARD  METHODS 

OF  WORK 


AUTHORITIES  AND  SOURCES 
FOR  PART  II 


Chapters  V,  VI,  and  VII.  Contributed  by  M r.  Porter  out 
of  his  own  experience  in  reducing  operation  to  written  standard 
practice  in  metal- working,  enameling  and  other  industries;  to- 
gether with  the  experience  of  J.  R.  Richardson,  Chicago  man- 
ager, Hotpoint  Electric  Heating  Company,  and  other  executives 
or  staff  men  in  such  enterprises  as  Joseph  T.  Ryerson  and  Son, 
Westerm  Electric  Company,  Lodge  &  Shipley  Company,  Franklin 
Automobile  Company,  and  others. 


HOW  TO  CODIFY  FACTORY 
PRACTICE 


WHEN  a  ship  has  been  launched,  supplied  and  manned, 
regulations  govern  its  routine  navigation ;  and  the  cap- 
tain is  freed  for  problems  of  policy  and  to  cope  with 
emergency  conditions.  No  less  should  this  be  true  in  the  factory. 
For  smooth  and  effective  operation,  consistently  low  production 
costs,  uniformly  high  quality  of  product  and  a  loyal,  contented 
working  force,  all  of  which  are  essential  to  the  permanent  pros- 
perity of  the  business,  standards  are  essential,  governing  prac- 
tically every  routine  activity  and  relation.  Standards  may  well 
be  set  up  for  building  design,  construction  and  maintenance ;  for 
equipment  selection,  location,  operation  and  upkeep ;  for  material 
purchasing,  receiving,  testing,  storing,  issuing,  processing  and 
accounting.  Standards,  too,  by  which  men  are  employed,  fitted 
to  the  job,  trained,  paid,  promoted,  their  health  and  welfare  con- 
served. Standards  by  which  orders  are  analyzed,  routed,  sched- 
uled and  despatched,  and  their  true  cost  obtained.  And  stand- 
ards by  which  the  organization  as  a  whole  is  unified  and  made  to 
work  as  one  man  toward  a  common  end.  Only  in  this  way  can 
management  lift  itself  above  the  maze  of  administrative  detail, 
and  get  a  perspective  upon  the  course  of  business. 

How  these  various  standards  are  determined  and  incorporated 
in  the  factory  practice,  and  the  benefits  that  follow  their  appli- 
cation have  already  been  indicated.  It  remains  to  discuss  how, 
when  the  manager  has  planned  and  manned  his  organization, 
these  standards,  once  set  up,  are  preserved  and  kept  at  all  times 
within  his  close  control. 

Time  was  when  the  average  factory  operated  entirely  under 


82 WRITTEN  STANDARD  PRACTICE 

the  personal  direction  of  its  supervisory  force — the  superintend- 
ent and  his  foremen.  What  to  do,  how  and  when  to  do  it,  were 
communicated  to  the  doers  almost  wholly  by  word  of  mouth. 
Memoranda  of  orders  to  produce  were  made,  perhaps,  on  scraps 
of  paper,  and  the  supervisors  for  their  own  convenience  kept 
certain  information  in  private  notebooks.  In  the  office,  too,  a 
more  or  less  complete  written  record  of  transactions  with  the 
outside  world — of  purchases  and  customers'  accounts — was  main- 
tained by  force  of  necessity.  But  "the  less  writing  the  better" 
seemed  to  be  the  creed.  In  the  modern  factory  a  very  different 
view  has  come  to  prevail.  '  *  Verbal  instructions  don 't  go ! "  is  thd 
slogan  printed  in  bold  type  across  the  top  of  a  blank  used  in  the 
Locomobile  plant,  and  it  reflects  the  new  spirit  which  discounts 
reliance  on  the  memory  as  well  as  on  the  spoken  word  in  operat- 
ing the  factory.  So  important  does  Harrington  Emerson  regard 
this  matter  that  he  numbers  "written  standard  practice  instruc- 
tions" among  his  twelve  principles  of  efficiency. 

WHY  AND  HOW  TO  MAKE  A  BEGINNING  IN  OPERATION  BY  WRITTEN 
STANDARD  PRACTICE  INSTRUCTIONS 

pUTTING  on  paper  the  standard  practices  of  a-  factory  greatly 
facilitates  control  and  direction ;  this  few  will  deny.  That  the 
full  effectiveness  of  an  organization  is  impossible  otherwise,  some 
may  be  inclined  to  question.  As  regards  a  very  small  factory, 
perhaps,  their  question  is  well-grounded.  Where  one  man  can 
personally  supervise  all  the  details,  the  need  for  written  stand- 
ards is  small.  Once  the  business  passes  the  "one-man"  stage, 
however,  the  need  increases  rapidly  and  if  the  task  of  compiling 
them  is  put  off  for  long,  perilous  centrifugal  forces  set  up.  While 
the  founder  and  dominating  mind  of  the  enterprise  retains  active 
control,  the  organization  may  work  smoothly  enough.  When, 
however,  his  masterful  personality  is  withdrawn  or  the  business 
becomes  too  large  for  him  or  any  one  man  longer  to  grip  all  its. 
details,  disorganization  begins  (Figure  XVII). 

Several  years  ago,  efficiency  engineers  were  called  in  to  check 
the  downward  coast  of  a  New  England  metal  works,  in  which  this 
condition  was  far  developed.  Begun  by  two  brothers  some  thirty 
years  before,  it  had  grown  rapidly  and  made  the  proprietors  a 


PUTTING    METHODS   IN   WRITING 


good  deal  of  money.  Less  than  two  years  prior  to  the  reorgan- 
ization, the  brother  who  had  looked  after  the  shop  end  had  died. 
A  man  of  vigorous  personality,  he  had  scorned  all  system,  looked 
upon  clerks  as  nuisances,  and  records  as  superfluous.  Conse- 
quently his  sudden  demise  deprived  the  business  not  only  of  its 


Define  Duties  and  Responsibilities 
Eliminate  Doubt  and  Uncertainty 
Coordinate  Instructions 
Avoid  Verbal  Instructions 
Prevent  Snap  and  Impassioned  Jirfi 


Rules  and  Standards  Must  Not  Be  Arbitrary 

Make  Them  Simple  and  Positive,  Implying  No  Resistance 

Experience  and  Wisdom  Govern 

Few  Rules-Only  Absolutely  Necessary  Ones 

Jrfake  Policy  Plain  to  All 

(1)  Discuss  Subject  from  Every  Point  of  View 

(2)  Consult  All  Department  Heads  Interested 

(3)  Submit  a  Temporary  Memorandum  for  Consideration 

to  Alt  Persons  Interested 

(4)  Put  Into  Shape  for  Issuance  After  Any  Objections  or 

Corrections  Are  Settled 

Product  Manufacture 
Product  Assembly 
Product  Testing 
Product  Wrapping  and  PacWnf 
Order  Handling  and  Costs 
Correspondence  Handling 
Selling  and  Advertising  Campaigns 
Maintenance  of  Instruction  System 


FIGURE  XVII:  Developing  a  code  of  written  standard  practice  involves  four  main  considerations: 

the  advantages  to  be  gained:,  the  policy  which  should  underlie  such  a  system,  the  specific  steps  to  be 

taken  in  developing  sound  practice,  and,  finally,  the  main  headings  under  which  instructions  group 

themselves.     The  vital  points  under  each  item  are  here  indicated 

driving  force,  but  also  of  much  vital  information  regarding  cus- 
tomers' requirements  and  manufacturing  knacks.  After  several 
really  capable  superintendents  had  tried  and  failed  to  fill  the 
old  man's  shoes,  the  financial  managers  thought  it  time  to  send 
out  an  "S.  O.  S." 

What  they  thought  they  wanted  primarily  were  a  cost  system 


84 WRITTEN  STANDARD  PRACTICE 

and  efficiency  wage  payment.  These  were  both  needed,  but  before 
either  reform  could  proceed,  the  special  knowledge  necessary  to 
the  conduct  of  the  business  had  to  be  wormed  out  of  the  work- 
men, dug  out  of  old  correspondence,  or  deduced  by  the  applica- 
tion of  engineering  principles  and  common  sense. 

Because  the  management  was  so  completely  dependent  on 
knowledge  monopolized  by  the  workmen,  it  was  at  their  mercy. 
They  were  boss  and  they  made  the  most  of  it.  A  more  obdurate 
labor  situation  could  scarcely  be  imagined.  The  workmen  op- 
posed every  effort  of  the  reorganizers  to  obtain  information.  The 
first  man  whose  work  was  put  under  systematic  observation  quit 
the  second  or  third  day  rather  than  part  with  any  of  his  "se- 
crets." His  motive  was  to  put  the  management  "in  a  hole," 
compel  it  to  call  off  the  investigator  and  reinstate  him  in  his  priv- 
ilege. He  thought  he  was  indispensable.  But  the  investigator, 
working  with  the  most  experienced  of  the  helpers,  went  ahead. 
Progress  was  slow  and  many  mistakes  were  made,  but  in  the 
course  of  a  few  weeks  all  the  essential  data  were  in  writing,  and 
a  routine  was  established  for  keeping  the  records  up  to  date. 

Similarly  one  operation  after  another  was  studied,  and  the 
correct  practice  codified.  Stubborn  opposition  was  encountered 
on  all  sides,  from  foremen  and  men  alike.  For  a  time  it  seemed 
impossible  to  get  reliable  time  and  material  reports.  But  patience 
and  persistence,  coupled  with  scientific  insight,  gradually  con- 
quered. When  the  foremen  saw  that  their  jobs  were  secure  and 
that  the  reform  really  was  for  their  convenience  as  much  as  any- 
thing else,  they  began  to  fall  in  line  one  by  one  and  once  their 
hearty  cooperation  had  been  won,  progress  was  more  rapid. 

A  similar  story  probably  could  be  told  about  many  other  fac- 
tories. Dependence  on  personality  finally  enslaves  the  business 
to  those  whose  personal  interests  clash  with  the  general  welfare. 
Emancipation  is  then  a  gigantic  task  and  one  fraught  with  grave, 
sometimes  fatal,  difficulties.  Every  manager  who  has  been  con- 
tent to  get  along  without  written  standard  practice  instructions 
may  well  make  the  beginning  at  once.  Nor  is  this  final  step  to 
good  organization  so  difficult  or  confusing  a  task.  Like  William 
Lodge,  of  Lodge  &  Shipley,  you  can,  by  spending  a  little  time  each 
day,  compile  in  a  few  months  a  code  of  rules  which  will  crystal- 
lize your  experience  and  views  for  the  benefit  of  your  associates 


PUTTING   METHODS  IN   WRITING 85 

and  successors.  Or,  like  Edward  L.  Ryerson,  works  manager  of 
Joseph  T.  Ryerson  &  Son,  you  can  organize  a  betterment  depart- 
ment in  charge  of  an  efficiency  engineer  who  will  carry  out  your 
ideas.  I.  A.  Berndt,  head  of  betterment  in  this  plant,  spends 
his  entire  time  perfecting  standard  practices.  As  soon  as  a  stand- 
ard is  established,  he  prepares  a  proper  instruction  covering  it. 
Then  he  and  Mr.  Ryerson  go  over  it,  often  consulting  the  various 
department  heads  interested.  Once  an  instruction  is  agreed 
upon,  it  is  manifolded,  one  copy  is  placed  in  the  office  files  and 
duplicates  are  sent  to  all  heads  concerned. 

The  preparation  of  written  standard  practice  instructions  natu- 
rally is  a  progressive  task,  in  fact  one  which  is  "never  done." 
For  standards  are  continually  to  be  changed  and  new  conditions 
are  arising  almost  daily  which  require  standards  and  instructions. 
Hence  in  every  reorganization  it  needs  to  be  the  special  business 
of  the  manager  or  some  one  close  to  him  and  unhampered  by 
routine  responsibility  to  give  this  matter  his  best  thought  and 
attention. 

Some  managers  object  to  written  standard  practice  instructions 
on  principle.  "They  are  so  many  straight- jackets  calculated  to 
deprive  men  of  their  individuality,"  vehemently  declared  one 
factory  executive.  Then  he  quoted  Jefferson's  laisse-faire  doc- 
trine, "That  country  is  best  governed  which  is  least  governed," 
paraphrasing  it  to:  "That  factory  is  best  run  which  is  least 
ruled." 

His  temperament  was  of  the  kind  that  chafes  under  rules  and 
restrictions.  Personally  he  was  opposed  to  having  a  single  writ- 
ten rule  or  standard.  But  he  had  no  scruples  against  calling 
in  his  foremen  to  lay  down  certain  common  practices  whenever 
conflicting  points  of  view  in  the  shop  led  to  misunderstandings 
and  production  delays.  And,  it  was  observed,  the  same  errors 
kept  repeating  themselves,  in  spite  of  his  positive  injunctions. 
He  had  to  go  over  the  same  ground  again  and  again  until  his 
patience  would  break,  and  the  axe  of  his  displeasure  would  fall 
right  and  left.  Many  times  the  blame  really  was  his,  as  he 
would  privately  issue  instructions  to  different  heads  that  con- 
flicted or  varied  from  previous  instructions.  Confusion  thus  was 
inevitable.  And  so  it  usually  is  when  dependence  is  placed  on 
word  of  mouth  and  fallible  human  memory.  If  he  had  reduced 


86 WRITTEN   STANDARD   PRACTICE 

his  instructions  to  writing  and  looked  upon  them  as  permanent 
standing  orders,  his  direction  would  have  gained  immensely  in 
effectiveness. 

Whether  or  not  Jefferson's  philosophy  is  correct,  as  applied 
to  political  units,  which  can  scarcely  be  said  to  be  "organized 
for  profit,"  a  factory  organization  must  work  as  one  man  if  it 
is  to  return  its  full  effort  day  in  and  day  out.  One  mind  with 
its  necessary  peculiarities,  its  whims  and  shortcomings,  need  not 
do  the  thinking  for  all;  but  all  must  serve  faithfully  certain 
tested  principles  and  practices.  Individuality  has  plenty  of  lati- 
tude for  expression,  even  in  the  most  closely  controlled  institu- 
tion, in  devising  and  suggesting  new  methods  and  in  seeking 
always  to  better  past  performances.  It  is  a  wrong  sense  of  indi- 
viduality which  would  conform  to  no  common  rules  and  regula- 
tions. So  doing  places  the  personal  privilege  of  the  individual 
above  the  good  of  the  group. 

HOW  WRITTEN  INSTRUCTIONS  INSURE  THE  FACTORY 
AGAINST  IMMEDIATE  AND  EVENTUAL  LOSSES 

"IK7HEN  instructions  are  expertly  compiled,  so  as  to  reduce  per- 
sonal friction,  and  are  accepted  by  the  men  as  enabling 
every  one  to  earn  more,  it  is  difficult  to  see  how  the  true  liberty 
of  the  individual  is  circumscribed.  Rules  might  cover  such  petty 
details  of  conduct  and  be  couched  in  such  terms  as  to  stifle  initia- 
tive and  provoke  a  sullen  antagonism.  But  that  is  a  fault  of  the 
application — not  of  the  principle.  Forms  are  written  standard 
instructions.  They  are  in  reality,  as  George  D.  Babcock,  pro- 
duction manager  of  the  Franklin  Automobile  Company,  has  ex- 
pressed it,  "instructions  developed  from  the  fundamental  laws  of 
the  system,"  providing  a  definite,  uniform  and  indispensable 
arrangement  for  the  distribution  of  information  throughout  the 
plant.  To  classify  and  codify  standard  instructions  in  general 
is  simply  to  extend  application  of  the  same  logical  principle. 

When  the  factory  manager  quoted  above  saw  how  friction  was 
reduced  by  the  first  set  of  standard  instructions  issued,  those 
governing  product  inspection,  his  attitude  began  to  change.  Soon 
not  even  the  president,  who  had  been  an  early  convert  to  the  plan, 
showed  keener  interest.  It  was  high  time,  for  the  president,  who 


PUTTING    METHODS   IN   WRITING 


87 


had  grasped  the  full  possibilities  of  written  standard  instructions 
and  was  throwing  the  entire  force  of  his  personality  into  their 
preparation,  was  in  no  mood  to  tolerate  even  a  show  of  indiffer- 
ence to  the  program.  He  was  master  of  the  business.  He  had 


locHi 


DIVISION  OF  STANDARD  INSTRUCTIONS 


FIGURES  XVIII  and  XIX: 

In  the  issue  of  standard  in- 
structions the  two  most  im- 
portant points  are  that  no 
subject  can  be  neglected  and 
that  the  instructions  reach 
everyone  concerned^.  Above 
appears  an  analysis  of  the 
various  producing  and  dis- 
tributing departments  which 
the  instruction  clerk  in  one 
concern  has  on  his  list.  At 
the  right  are  listed  the  thirty- 
one  subjects  under  which 
standards  are  developed  and 
indexed,  beginning  with  the 
index  of  subjects  to  be 
of 


covered  and  the  details 
preparation  and  control. 
These  methods  of  a  1000- 
man  factory  may  be  applied 
in  a  less  formal  way  in  the 
smaller  shop 


rl 


its  every  detail  at  his  finger  tips.  But  it  was  beginning  to  get 
away  from  him.  To  lay  down  his  personality  and  experience  in 
writing  was  not  only  to  relieve  himself  of  the  breaking  load  he 
was  carrying,  but  also  to  pave  the  way  permanently  for  more 


88 WRITTEN   STANDARD  PRACTICE 

effective  control.  He  was  impatient  for  results  because  to  him 
completion  of  the  code  meant  freedom — for  himself,  freedom  to 
think  and  plan  ahead;  for  the  factory,  freedom  from  reliance 
on  unco-ordinated  personal  management. 

"There  is  the  chart  of  this  institution,"  he  indicated  to  his 
lieutenants  one  day,  pointing  to  the  cabinet  in  which  were  kept 
the  office  copies  of  the  standard  instructions  on  which  he  and 
the  efficiency  engineer  had  been  working  almost  night  and  day 
for  several  weeks.  "When  these  directions  are  finished,  the 
entire  plant  can  be  destroyed  and  duplicated  without  serious 
difficulty ;  or  should  I  die  suddenly,  whoever  takes  my  place  will 
be  able  to  take  hold  and  run  the  business  as  usual." 

He  was  right.  A  thorough-going  code  of  factory  practice  is 
the  best  possible  business  insurance.  To  an  industry  it  is  what 
plans  and  specifications  are  in  construction  work,  what  the  knowl- 
edge of  the  past  handed  down  in  books  is  to  the  present,  what 
the  records  of  today  will  be  to  the  future.  Only  knowledge 
trusted  to  the  human  memory  is  perishable.  It  is  a  wise  factory 
manager  who  gets  every  essential  fact  about  his  establishment 
on  paper,  classified  and  codified  for  most  convenient  reference. 
To  do  so  is  the  essence  of  good  business  judgment. 

There  is,  moreover,  an  immediate  dividend  to  be  had  from 
a  code  of  factory  practice.  "If  you  want  to  find  out  how  little 
you  know  about  a  subject,"  some  one  has  said,  "start  to  write 
about  it. ' '  So  when  you  start  to  prepare  standard  instructions, 
you  will  doubtless  be  surprised  at  the  many  things  on  which 
neither  you  nor  your  assistants  are  clearly  informed.  Both  you 
and  they  have  been  depending  entirely  too  much  on  the  tradi- 
tions possessed  by  certain  workmen,  which  they  have  picked  up 
in  practice  or  fallen  heir  to,  and  kept  to  themselves.  You  will 
find,  too,  not  only  many  wrong  practices  of  which  you  were  not 
aware,  but  many  tasks  indifferently  and  irregularly  done  because 
responsibility  for  them  has  never  been  definitely  centered.  Be- 
fore instructions  can  be  written  on  many  points,  not  a  little 
research  and  study  of  the  most  profitable  sort  will  be  necessary. 

Two  ways  of  preparing  a  code  of  factory  practice  are  in 
use.  One  is  to  write  the  instructions  in  the  order  of  their  ap- 
parent need,  numbering  them  serially  and  cross-indexing  by 
subject.  This  is  the  natural  procedure.  You  will  better  attain 


PUTTING   METHODS  IN  WRITING  89 


LIST  OF  SUBJECTS  IN  THE  HOTPOINT  ELECTRIC  HEATING 

COMPANY'S  EXECUTIVE  FILE  OF  STANDARD 

INSTRUCTIONS 

General  Class 

1— Standard  instructions  from  main  office. 

2 — Chicago    office   instructions    covering   handling   of   work   in   the 

organization. 
3 — General,   or   temporary,   instructions   issued   by    main   office   to 

organization  in  general  for  handling  of  advertising  campaigns 

or  special  reports. 

Folders 

1 — Advertisements  (Folder  containing  copies  of  all  advertisements) 

2 — Appliances 

3 — Business  articles  in  magazines  (clippings) 

4 — Campaigns  (Folders  on  each  selling  campaign  in  progress) 

5 — Chicago  office   (Folders  for  Billing,  Employment,  Filing  Service, 

Printing,  Purchasing  Sales,  Stockkeeping,  Shipping) 
6 — Reports 

7 — Selling  arrangements  (with  jobbers) 
8 — Technical  information  (copies  of  letters  to  customers  explaining 

technical  points  and  any  other  technical  data  regarding  pre- 
cedent.   Used  by  sales  force  for  reference) 
9 — Printing  department 

a — Printing  department  instruction 

b — Samples  of  all  circular  matter 

c — Crystaloid  signs 

d— Cooperative  cuts 

e— Guarantee  tags 

f — Jobbers'  catalogs 

g — Cooperative  catalogs 

h — Lantern  slides 

k  — Letterheads 

I— No.  110 


j— No.  218,  etc. 
Him 


10 — Selling  contracts 

a — 1914  selling  contract 

b — 1915  selling  contract 

c — with  suppliers 

11 — Export  (Filed  according  to  countries) 
12 — Form  letters  (Models  for  future  letters) 


FIGURE  XX:  Some  of  the  subjects  under  which  standard  instructions  are  filed  at  the  Chicago 
office  of  the  Hotpoint  Electric  Company  are  here  listed.  Whjle  this  suggests  the  general  method, 
ch  plant  will  require  its  own  analysis  to  suit  individual  conditions 


eucl 


results  in  the  end,  however,  if  before  the  first  instruction  is  pre- 
pared you  develop  a  complete  plan  on  their  preparation,  index- 
ing, issuance  and  control.  In  the  plant  previously  referred  to, 
this  was  the  method  followed. 

First  the  work  was  classified  and  a  folder  prepared  for  each 


90 WRITTEN  STANDARD  PRACTICE 

subject  that  was  to  be  covered  by  a  written  instruction  (Figure 
XX).  Then  instructions  were  prepared  governing  the  prepara- 
tion of  instructions ;  the  language  to  be  used,  manner  of  empha- 
sizing items,  paragraphing,  size  of  sheet,  margins,  indexing  and 
approving  (Figure  XXII).  To  work  out  the  classification  took 
weeks.  But  when  it  was  done,  a  place  was  provided  for  every 
essential  standard  and  item  of  information.  Indexing  by  sub- 
ject was  adopted  as  facilitating  quicker  reference.  Each  instruc- 


HOW  INSTRUCTIONS  ARE  SUBDIVIDED  AND  ISSUED 
IN  ONE  PLANT 

Record  Forms 

Folder  for  each  form  filed  according  to  file  number 
Product  Inspection 

1.  Chief  Inspector's  Instructions 

2.  Foundry  Inspector's  Instructions 

3.  Cleaning  Department   Inspector's  Instructions 

4.  Engineering  Inspector's   Instructions 

5.  Packing  Inspector's  Instructions 

Organization  Instructions 

1.  Factory  Manager  8.  Production  Department 

2.  Production  Superintendent  9.  Timekeeping 

3.  Foundry  10.  Cost  Department 

4.  Cleaning  Department  11.  Master  Mechanic 

5.  Engineering  Department  12.  Sales  Department 

6.  Packing  Department  13.  Accounting  Department 

7.  Shipping  Department  14.  Typing  Department 


FIGURE  XXI:      Here  are  listed  the  important  subdivisions  of  the  instructions  relating  to  inspec- 
tion and  organization  in  a  factory  which  employs  about  one  thousand   men.     Certain  general 
instructions  will  go  to  all  the  divisions  indicated,  while  special  instructions  for  each  department  are 
required  to  cover  the  duties  peculiar  to  it 

tion  was  also  numbered  and  the  number  used  in  filing.  Instruc- 
tions thus  were  located  by  subject,  but  returned  to  the  file  by 
number.  Each  sheet  bore,  at  the  lower  left,  the  names  of  all 
persons  or  departments  receiving  the  instruction,  so  as  to  ob- 
viate the  necessity  for  a  separate  record.  This  plan  had  the 
further  advantage  of  compelling  the  author  of  the  instruction 
to  consider  in  advance  who  were  the  interested  persons,  not  to 
leave  it  to  afterthought  and  so  perhaps  fail  to  weave  into  the 
composition  a  balanced  point  of  view.  The  names  also  insured 


JS-9 

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1-8 

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88 

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111 


II 


cj 


11 


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II 


PUTTING   METHODS  IN   WRITING 93 

that  no  one  should  be  forgotten  when  the  instruction  was  issued. 
A  check  mark  after  each  name  indicated  issuance ;  and  cancella- 
tion, that  the  head  had  acknowledged  the  instruction  and  ac- 
cepted it. 

HOW  TO  AVOID  ANTAGONIZING  WORKMEN  WHEN  YOU 
DRAW  UP  STANDARD  INSTRUCTIONS 

rpHAT  the  effectiveness  of  the  instructions  would  depend 
largely  on  the  phrasing  used,  as  well  as  the  form  in  which 
they  were  presented,  was  early  realized.  The  style,  or  key 
instruction  was  therefore  prepared  with  great  care.  The  im- 
portance of  these  points  are  well  recognized  in  correspondence 
and  advertising.  Their  value  is  equally  evident  in  case  of 
written  factory  standards,  for  these  must  convey  positive  and 
definite  guidance  to  men  more  or  less  illiterate  and  dull  of  com- 
prehension, whose  minds  respond  with  difficulty  to  alien  associa- 
tions and  who  at  best  make  awkward  work  of  translating  words 
into  ideas. 

Simplicity  of  expression,  therefore,  is  desirable.  Plain  shop 
talk,  pruned  of  its  grammatical  errors  and  coarse  vulgarities, 
is  the  best  medium  of  expression.  It  may  lack  elegance,  but  it  is 
the  language  the  men  understand.  The  use  of  graphics,  too, 
where  possible,  helps  wonderfully.  Pictures  and  diagrams  are 
capable  of  conveying  ideas  where  words  fail. 

Particularly  in  the  shop  rules,  it  is  well  also  to  taboo  certain 
words,  such  as  employer  and  employee,  company  and  others 
which  imply  a  class  distinction  and  tend  to  make  men  feel  that 
they  are  mere  labor,  rather  than  partners  in  the  business.  Call 
the  workers  men,  refer  to  the  company  as  we  and  our.  Dispense 
with  the  pronoun  I,  the  imperative  must,  the  restrictive  don't. 
Avoid,  in  short,  every  word  and  phrase  connoting  personal  pre- 
rogative and  the  exercise  of  arbitrary  power.  Better  no  rules 
than  those  that  arouse  antagonism  with  every  line.  As  adver- 
tising and  salesmanship  have  fairly  well  established,  there  is  a 
sound  psychology  of  suggestion  in  simple,  direct,  present  tense 
statements,  made  in  the  expectation  of  cheerful  conformance. 
Giving  the  reasons  where  not  self-evident,  too,  is  a  big  factor, 
for  men  who  understand  the  why  of  a  how  usually  respond  in 
the  proper  spirit. 


94  WRITTEN  STANDARD  PRACTICE 


DUTIES  07  OPERATIONAL  70RBMBN  IH  CLEANING  DEPARTMENT 
1.  RESPONSIBILITIES 


is! 


(g) 

(h) 


(a)   Issuance  of  work  to  men  —  men  may  not  help  themselves 
(t>)  Proper  marking  of  all  pieces  worked  on  and  passed 
"e)  Proper  tallying  of  all  pieces  finished  and  passed 

Proper  keeping  of  time  taken  and  pieces  worked  on  in  case 
of  day  workers 

(e)  Instruction  of  men  how  to  do  the  work 

(f)  Inspection  of  work  done  to  see  that  it  is  done  properly 
Prompt  rejection  of  all  defective  or  broken  pieces 
Investigation  and  reporting  of  all  damages  to  castings 

(i)  Checking  up  of  his  men  the  first  thing  every  morning,  and 

again  after  dinner,  in  the  time  book  provided 
(J)  Enforcing  the  rules  of  the  chop  as  they  concern  his  men 

2.  HOUNDS 

Each  foreman  shall  make  his  rounds  of  the  men  in  regular  routine 
and  order,  as  prescribed  herewith  and  shown  on  the  accompanying 

cases  of  extreme  need  —  for  instance,  an  accident. 

He  will  begin  his  rounds  promptly  at  7:00  A. II.  One  and  one- 
quarter  hours  (75  min. )  is  allowed  for  each  round.  During  the 
morning  he -will  make  four  complete  rounds  as  follows:  1st.  7:00 
A.  II.  to  8:15  A.  II.  ;  2nd.  8:15  A.  It.  to  9:30  A.  U.  ;  3rd.  9:30 
A.  II.  to  10:45  A.  11.  ;  4th.  10:45  A.  II.  to  12:00  A.  U. 

During  the  afternoon  he  will  make  four  complete  rounds,  as  fol- 
lows: 1st.  12:30  P.  II.  to  1:45  P.  M.  ;  2nd,  1:45  P.  II.  to  3:00  P. 
M.  ;  3rd,  3:00  P.  II.  to  4:15  P.  II.  ;  4th.  4:15  P.  II.  to  5:30  P.  II. 

In  case  of  overtime,  he  will  observe  a  similar  procedure.  He 
will  visit  each  man  in  turn,  instructing  him  and  Inspecting  his 
work,  seeing  that  his  time  tickets  are  being  made  out  properly, 
that  finished  tickets  are  collected,  and  that  a  new  one  is  always 
in  the  Job  Ahead  Clip. 

3.  QUALITY  01  WORK 

foremen  are  directly  responsible  to  the  Chief  Product  Inspector 
for  the  quality  of  the  product  and  the  careful  handling  of  same. 
They  will  cooperate  with  him  In  every  way  possible.  The  foreman 
of  grinding  will  pay  special  attention  not  only  to  see  that  the 
work  is  properly  done  but  that  excessive  grinding  is  avoided. 
He  will  also  see  that  pieces  requiring  excessive  grinding  to  fit 
them  for  subsequent  operations  are  promptly  rejected  and  sent  to 
the  reject  pile,  and  that  the  pieces  are  not  again  worked  on. 

4.  HIRING  MEN 

Foremen  requiring  additional  men  will  report  to  the  head  of 
department,  who  will  requisition  the  planning  department. 

5.  DISCHARGING  IIEN 

Men  not  satisfactory,  either  because  they  are  unfitted  for  the 
work  or  are  unwilling  to  conform  with  the  rules,  will  be  re- 
ported promptly  to  the  head  of  the  department.  lien  may  not  be 
dismissed  or  changed  except  on  authority  of  the  head  of  the 
department,  and  in  every  case  a  report  will  be  made  to  the 
Factory  Uanager,  giving  the  reasons  justifying  the  discharge. 
The  foreman  will  make  out  this  report  and  the  head  of  the  de- 
partment will  countersign  it.  adding  any  remarks  he  sees  fit. 

Copies  to: 
Cl-D  711e  (Signed) _ 


Factory  Manager 


FIGURE  XXII:  A  typical  instruction  sheet  is  here  reproduced  from  the  written  standard  practice 
of  a  Wisconsin  factory.  Points  to  be  noted  by  the  manager  who  is  planning  such  a  system  are  the 
arrangement  of  headings  and  the  simple,  clear,  persuasive  phrases  in  which  the  duties  are  explained 


PUTTING   METHODS  IN   WRITING 95 

An  observing  foreign  visitor  who  witnessed  the  maneuvers  of 
the  United  States  troops  several  years  ago,  writing  of  his  im- 
pressions, drew  an  interesting  comparison  between  American 
troops  and  his  home  soldiery.  He  noted  little  difference,  he  said, 
in  the  technique  of  their  drilling,  but  a  marked  difference  in 
their  manner.  The  European  soldier  responded  mechanically  to 
his  orders,  and  his  face  was  dull  and  expressionless.  The  Ameri- 
cans, on  the  contrary,  showed  spontaneity,  as  if  they  were  con- 
scious of  the  purpose  behind  every  order,  and  might,  on  occa- 
sion, take  command.  ' '  Theirs  to  do  and  die,  but  not  to  reason 
why,"  may  have  satisfied  the  medieval  serf  and  arms  bearer, 
but  it  does  not  satisfy  either  the  American  soldier  or  the  Ameri- 
can workman.  He  wants  to  know  the  why  of  everything,  and 
when  he  understands  the  reason  and  sees  the  justice  of  it,  the 
chips  fly. 

Merely  to  give  the  instructions  proper  form,  therefore,  war- 
rants the  chief  in  specializing  the  task  of  preparation. 

Their  substance  may  be  dictated  by  the  factory  manager  or 
determined  in  conference.  But  the  actual  composition  needs 
to  be  centered  in  some  one  who  can  "sell  an  idea."  For  greatest 
effectiveness,  the  typing  also  needs  to  be  handled  by  one  person. 
Composition  in  the  case  cited  was  done  by  the  efficiency  engineer, 
working  in  close  conjunction  with  the  chief  executive  heads; 
and  the  typing  was  done  by  the  president's  private  secretary, 
who  was  also  made  responsible  for  the  safekeeping  of  the  office 
file. 


VI 

PLANNING  AND  PREPARING 
THE  ESSENTIAL  FORMS 


AT  THE  center  of  every  system  of  written  standard  practice 
are  certain  records  so  essential  and  invariable  that  they 
have  been  reduced  to  standard  forms.  To  some  men  a 
form  is  merely  a  slip  of  paper;  to  others  it  is  a  synonym  for 
"red-tape,"  whatever  they  may  mean  by  that.  As  a  matter  of 
fact  a  form  is  an  instruction — a  tool  in  the  fashioning  of  work. 
It  is  a  tool  because  it  is  indispensable  to,  or  facilitates,  the 
operation  of  the  business.  Where  will  such  tools  be  needed — the 
complete  scheme  of  forms  and  records  for  all  departments — how 
to  design  them,  what  materials  will  afford  greatest  economy  and 
service,  how  to  make  each  blank  carry  its  maximum  load  and 
avoid  unnecessary  varieties,  are  matters  for  the  management. 
Separate  departments  and  subordinate  officials  often  lack  the 
perspective  to  develop  proper  forms  without  assistance.  More 
and  more,  the  heads  of  concerns  are  laying  down  policies  of 
general  control  and  expert  supervision  over  all  forms  and 


Of  any  tool  these  considerations  are  pertinent:  (1)  it  shall 
be  suitable  to  the  purpose;  (2)  it  shall  be  proper  in  size  and 
shape;  (3)  it  shall  be  made  of  the  right  material;  (4)  it  shall 
carry  explicit  identification;  (5)  those  who  use  it  shall  be  fully 
instructed  in  the  correct  method;  (6)  one  tool  shall  serve  as 
many  purposes  as  practicable,  to  avoid  duplication  and  simplify 
the  care  and  control;  (7)  the  supply  shall  at  all  times  be 
adequate;  and  (8)  the  cost  shall  be  reasonable. 

So  of  a  form,  the  first  requirement  is  that  it  shall  be  suitable 
to  the  purpose.  This  brings  up  the  question,  What  is  the  pur- 


PLANNING  AND   PREPARING  FORMS 97 

pose  ?  What  condition  or  combination  of  conditions  has  made  it 
seem  necessary  or  desirable?  Is  the  same  condition  or  com- 
bination present  in  other  departments,  so  that  the  one  form  will 
serve  several  situations?  What  auxiliary  purposes  may  it  be 
made  to  serve,  as  in 'the  assemblage  of  cost  data  from  time  and 
stores  tickets?  What  information  is  required  on  the  form  and 
how  should  this  be  arranged  in  order  to  make  the  form  as  con- 
venient  in  operation  as  possible?  What  information  shall  be 
required  of  the  shop,  how  shall  this  be  filled  in  and  by  whom? 
What  shall  be  done  with  the  information  thus  gathered  ? 

These  questions  can  best  be  answered  after  getting  clearly  in 
mind  the  exact  place  of  any  proposed  form  in  the  general  scheme 
of  things — its  function  in  the  system  of  management,  its  relation 
to  other  functions. 

Accordingly,  a  good  beginning  is  to  chart  the  various  activities 
of  the  business  (Figure  XXIII) .  Start  with  purchasing.  A  pur- 
chasing order  of  some  kind,  first  of  all,  is  needed.  Since  all 
purchase  orders  require  a  follow-up,  at  least  one  duplicate  is 
necessary,  to  be  filed  in  a  tickler.  A  copy  is  also  necessary  for 
filing  numerically  by  the  serial  number  of  the  order.  This  copy 
may  be  made  to  serve  both  purposes  by  having  the  days  of  the 
month  from  one  to  thirty-one  printed  across  the  top  edge  and 
using  tickler  tabs.  But  a  second  copy  for  filing  alphabetically 
by  name  of  vendor  is  often  desirable,  to  further  ready  reference 
to  orders  placed.  Some  notification  to  the  receiving  clerk  as  to 
when  purchases  will  arrive  is  also  desirable,  and  this  can  be 
accomplished  conveniently  by  having  still  another  copy. 

When  purchases  come  in,  some  definite  form  of  receipt  is 
necessary,  which  the  receiving  clerk  can  fill  out  and  return  to 
the  office  for  checking  with  the  proper  invoices.  As  it  is  well 
for  the  receiver  to  keep  a  record  of  all  receipts  for  his  own 
benefit,  this  form  needs  to  be  in  duplicate.  If  purchases  are 
inspected  or  tested  for  conformance  to  specification,  an  inspec- 
tion report  also  is  necessary.  To  insure  that  receipts  are 
delivered  intact  to  the  storeroom,  a  further  report  from  the 
storekeeper  is  desirable.  The  same  receipt  form  can,  however, 
often  be  made  to  serve  all  these  purposes. 

Upon  receiving  these  various  reports,  the  purchasing  agent 
can  check  his  purchase  invoices  with  assurance  and  put  through  a 


98 WRITTEN   STANDARD   PRACTICE 

voucher  for  payment.  From  the  same  reports  the  inventory 
balance  can  be  corrected.  An  inventory  form  is  therefore 
needed  next.  As  material  issued  also  has  to  be  recorded,  to  keep 
the  balance  correct,  a  material-issue  slip  is  further  necessary. 
Where  the  storeroom  is  requisitioned  by  the  shop,  this  same 
form  becomes  the  shop  requisition.  In  case  deliveries  from 
stock  are  made  on  order  of  the  production  or  planning  depart- 
ment, it  serves  as  the  order.  When  returned  to  the  office,  in 
addition  to  furnishing  the  information  by  which  the  inventory 
balance  is  diminished,  the  stores-issue  form  also  becomes  the 
voucher  to  the  cost  department  for  charging  costs.  It  thus 
serves  several  purposes. 

Before  the  purchasing  agent  can  issue  a  purchasing  order,  he 
must  know  from  the  production  side  what  and  how  much  to 
purchase  and  when  it  is  needed.  Materials  kept  in  stock  are 
controlled  by  maximum  and  minimum  stock  limits.  Daily  the 
clerk  who  operates  the  inventory  record  must  therefore  report 
to  him  those  stocks  that  have  reached  their  minimum.  This 
report  can  be  written  on  any  sheet  of  paper,  but  as  a  good  many 
of  them  are  made  in  a  year,  it  will  save  clerical  time  and  errors 
in  reporting  if  a  printed  form  is  provided.  Requirements  for 
materials  and  other  items  which  are  not  kept  on  hand,  but  are 
bought  on  the  requisition  of  the  shop  or  planning  department, 
subject  to  the  approval  of  the  factory  manager,  call  for  a  suit- 
able requisition  blank.  To  check  up  price  quotations,  as  well  as 
to  furnish  the  data  for  pricing  cost  records,  some  tabulation  of 
previous  quotations  is  essential.  Some  buyers  keep  such  infor- 
mation in  a  small  notebook,  but  it  better  serves  the  general 
convenience  if  a  regular  form  is  provided. 

These  are  by  no  means  all  the  forms  that  the  purchasing 
function  of  a  business  may  entail,  but  they  are  the  principal 
ones,  and  in  essentials  are  found  under  one  or  another  name  in 
every  organized  plant,  because  they  facilitate  buying  operations 
which  every  business  involves.  Each  serves  two,  three  or  more 
purposes.  Purchasing  is  interwoven  with  storekeeping  and  both 
of  these  with  cost  keeping.  A  thorough  analysis  of  the  purchas- 
ing function  thus  reveals  not  only  the  essential  purchasing 
forms  but  also  the  auxiliary  purposes  these  forms  should  serve. 

Some  of  the  purchasing  and  storekeeping  forms  have  also  a 


PLANNING   AND   PREPARING   FORMS 


99 


FIGURE  XXIII:  This  chart  illustrates  the  necessity  of  certain  standard  forms  in  all  departments 
of  the  factory  and  indicates  by  cross-references  how  one  form  may  be  made  to  serve  several  pur- 
poses.    It  U  a  part  of  good  management  to  plan  a  clean-cut  system  of  forms  by  which  standard  in- 
structions and  records  are  handled  with  the  least  possible  special  work 


100 WRITTEN   STANDARD   PRACTICE 

very  direct  relation  to  production.  For  its  supply  the  shop 
must  requisition  either  the  purchasing  department  or  the  store- 
room. When  the  supply  is  anticipated  by  the  planning  depart- 
ment, the  issue-slip  becomes  a  definite  part  of  the  order  system. 
And  the  records  of  these  two  departments  are  constantly  neces- 
sary to  the  planners  in  scheduling  the  Work  of  the  shop.  No 
order  to  manufacture  can  be  issued  until  it  is  known  that  the 
required  materials,  tools  and  supplies  are  available. 

Points  of  tangency  of  production  with  the  purchasing  and 
storekeeping  functions  have  already  been  indicated.  The  key- 
stone form  in  factory  operation,  however,  is  the  production  or 
manufacturing  order.  This  is  the  means  whereby  the  office 
informs  the  factory  what  to  make  and  when  to  make  it.  At 
least  one  duplicate  is  necessary  for  the  office  follow-up  and 
record.  If  more  than  one  department  will  do  work  on  the  order, 
a  copy  will  need  to  go  to  each,  if  for  no  other  reason  than  to 
advise  it  what  is  ahead.  These  several  copies  are  returned  to 
the  office,  signed  and  dated  by  the  respective  foremen  or  pro- 
duction clerks,  when  the  work  thereon  stipulated  is  completed, 
and  are  then  filed  with  the  follow-up  copy.  In  this  way  the 
office  keeps  tab  on  the  progress  of  all  orders  and  sees  whether 
the  schedule  is  being  observed.  The  production  order  is  initiated 
by  requisition  of  the  sales  department  in  case  of  special  orders, 
or  by  a  shortage  report  based  on  an  inventory  record  of  finished 
stock  and  goods  in  process.  The  inventory  record  in  turn 
receives  its  information  from  output  and  shipped  reports.  For 
all  these  purposes,  forms  are  the  accepted  instruments. 

To  identify  each  lot  of  work  in  its  course  through  the  factory, 
as  well  as  to  steer  it,  an  identification  or  routing  ticket  should 
be  made  out  at  the  same  time  the  order-to-make  is  prepared,  and 
should  accompany  the  copy  tnereof  that  goes  to  the  originating 
department.  This  remains  with  the  work  until  processing  is 
completed  and  it  is  packed  for  shipment.  Sometimes  the  same- 
ticket  can  collect  the  labor  charges  on  the  way,  and  on  the  re- 
verse side  the  cost  summary  may  be  compiled,  as  explained  under 
the  subject  of  costs.  Again,  if  on  the  coupon  principle,  it  can 
be  made  to  furnish  a  very  close  follow-up  on  special  orders.  The 
original  ticket  carries  a  coupon  for  each  important  operation. 
When  an  operation  is  done,  the  corresponding  coupon  is  detached 


PLANNING   AND   PREPARING   FORMS 101 

and  returned  to  the  office  by  the  factory  mail  service.  Arriving 
there,  it  is  hung  on  a  follow-up  board.  Thus  the  factory  man- 
ager by  consulting  the  board  can  know  the  whereabouts  and 
status  of  every  special  order  almost  to  the  minute.  If  the 
product  is  one  made  up  of  many  parts  and  involving  one  or 
more  assemblies,  identification  tickets  are  of  course  necessary 
for  each  lot  of  parts  and  again  for  each  assembly. 

The  production  order  carries  all  the  information  necessary  for 
its  execution,  except  such  detailed  instructions  as  drawings  and 
special  instruction  cards  alone  can  convey,  and  it  carries  the 
reference  to  these.  If  planning  is  completely  separated  from 
execution,  t  each  production  order  before  issuance  will  be  an- 
alyzed, any  new  drawings  and  instructions  prepared,  special 
materials  ordered,  special  tools  likewise  supplied,  and  work- 
cards  made  up  for  each  operation  required,  stating  the  time 
limit  and  the  bonus  or  premium  if  any.  Not  before  everything 
is  in  readiness  will  the  order  be  issued.  Consequently  when  it 
is  sent  out,  execution  proceeds  with  dispatch. 

Mention  of  work-cards  brings  the  production  function  into 
contact  with  the  time-keeping  and  cost  functions.  Many  types 
of  card  are  in  use.  So  far  as  payroll  and  cost  purposes  are 
concerned,  a  card  for  each  job  for  each  man  is  not  absolutely 
essential.  The  requirements  of  planned  work,  however,  narrow 
the  choice  to  the  single  job  time-ticket.  When  it  is  seen  that 
the  same  form  which  serves  to  collect  the  man's  time  can  also 
become  the  medium  of  planning  his  activity,  any  time-ticket 
which  does  not  admit  of  this  added  function  becomes  merely  an 
expedient. 

In  the  office,  to  receive  the  information  brought  in  by  the 
labor  and  material  cards,  certain  distributing  and  summary 
forms  are  needed.  On  the  one  hand  are  the  payroll  forms  arid 
on  the  other  the  expense-analysis  and  cost-summary  sheets.  In 
addition,  there  are  the  forms  required  for  bookkeeping  purposes. 
A  clear  analysis  of  the  cost-finding  function  reveals  every 
essential  form. 

On  the  labor  side,  in  addition  to  the  time-ticket  or  work-card 
and  payroll  sheets,  some  form  of  employment  blank  is.  almost 
always  necessary  and  also  an  efficiency  record,  although  these 
may  easily  be  combined.  In  a  large  plant  a  number  of  sub- 


102 WRITTEN  STANDARD  PRACTICE 

sidiary  forms  may;  also  be  required,  to  afford  a  definite  means 
of  advising  the  payroll  department  of  dismissals,  rate  changes 
and  shifts  from  one  department  to  another.  In  a  factory  where 
the  accident  hazard  is  serious,  an  accident  report  blank  is  justi- 
fied and  if  physical  examination  of  applicants  is  practical,  for 
that  also,  a  suitable  blank. 

Out  in  the  factory,  again,  processing  must  be  matched  with 
inspection,  requiring  one  or  more  inspection  blanks.  If  work 
may  be  moved  only  when  passed  by  inspection,  a  move-order  is 
further  needed.  If  work  in  process  is  checked  forward  from 
department  to  department,  tally  blanks  are  required.  If  goods 
returned  are  an  item,  special  receipt  and  inspection  forms  are 
necessary  for  these. 

Repairs  to  machines  require  first  of  all  a  requisition  blank  by 
which  the  shop  can  call  upon  the  office  for  action,  and  then  a 
service  or  repair-order  blank  by  which  the  maintenance  depart- 
ment is  instructed  to  proceed.  The  same  order  form  will  usually 
answer  also  for  new  construction,  machinery  installation  and 
special  equipment  building,  when  done  by  the  factory  force.  To 
compute  the  cost  of  such  work  a  special  cost-summary  form  is 
needed  and  to  rate  machines  intelligently,  an  individual  machine 
card  on  which  all  the  purchase  data,  installation  cost,  repairs, 
depreciation  and  so  on  can  be  listed. 

So  each  function  can  be  taken  up  in  turn  and  the  definite 
steps  in  planning,  execution  and  control  disclosed.  Whenever 
a  form  is  needed  will  then  be  plain.  By  tracing  the  overlapping 
of  functions,  the  management  discovers  the  different  purposes 
one  form  can  serve  and  thus  avoids  needless  duplication. 

DETERMINING  THE  SIZE,  MATERIAL  AND 
CONTENT  OF  FORMS 

LJT  AVING  established  the  purpose  of  each  form,  the  next  step 
is  to  tabulate  the  information  required  on  each.  As  with 
other  standard  instructions,  a  rough  draft  of  the  form  may  well 
be  prepared  and  the  views  of  the  various  interested  persons 
obtained.  The  A.  B.  Farquhar  Company  have  found  this  plan 
particularly  valuable.  Their  practice  is  to  sketch  out  a  proposed 
new  form  on  a  large  scale  and  then  have  it  thoroughly  discussed 


PLANNING   AND   PREPARING  FORMS 


103 


from  every  point  of  view.  The  revised  form,  when  printed, 
usually  satisfies  everybody.  Preparation  of  forms  is  supervised 
by  the  assistant  purchasing  agent. 

Information  carried  on  a  form  will  chiefly  govern  its  size  and 
shape.  But  its  use  must  also  be  considered.  A  shop  form  needs 
to  be  fairly  small  and  compact.  Office  forms  are  less  limited  in 
this  respect,  although  odd  sizes  and  shapes  require  special 
binders  or  files  and  forms  larger  than  eighteen  inches  deep  by 
twenty-four  or  thirty  inches  wide  are  difficult  to  operate. 

Another  fact  to  consider  is  the  standard  sizes  of  paper  and 
card-board  stock  available.  Printers  will  make  up  any  size 
specified,  but  waste  may  prove  expensive  if  a  standard  sheet 
does  not  cut  up  evenly.  Bond  paper  comes  in  sheets  17x22 
inches  and  19x24,  some  kinds  also  in  34x44.  All  of  these  are 


Nam< 

1          >- 

^ 

'(T, 

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DATE 

NUMBER 

DEPT. 

v> 

Date  of  Employment    J&4--  <£  -  /<?/*{- 

ADDRESSES 

J-a-/y 

J>?* 

X? 

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Employed  by    &»4-  ebfM    Rate    •  5  & 

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Class  of  Work  4*g*  s*&&{~*~?.  

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Previous  Employment    TkAuntSv-  &) 

Whv  Ended    c^U^.    ~£f 

1  herewith  vouch  for  the  correctness  of  the  above  : 
Signed     &t*t*e  hk»»*:~4*»t 

Wrtoess&iEu^-  Accept,d_^M>£. 

FORM  I:      A  manila  envelope  serves  not  only  as  an  enclosure  for  time-tickets  and  other  standard- 
ized forms  at  the  Joseph  and  Feiss  plant,  but  also  as  a  form  itself,  carrying  the  employment  history 
of  the  workman  concerned.     Economy  of  material,  space  and  time  is  thus  obtained 

multiples  of  the  8y2xll  or  standard  letter-size  sheet.  There- 
fore, all  forms  of  this  stock  may  well  be  based  on  the  8V2XH 
size.  Divided  in  two  the  eleven  way  gives  a  5^2x81/2,  or  nominal 
5x8.  Quartered,  a  4^x5^,  or  nominal  4x6.  Halved  the  eleven 
way  and  divided  thrice,  the  S1/^  way,  makes  a  2%x5^,  or 


104 WRITTEN  STANDARD   PRACTICE 

nominal  3x5.  The  8y2  dimension  doubled  gives  an  11x17  sheet — 
a  convenient  size  for  office  records  which  are  to  be  bound  on  one 
edge.  Doubling  both  dimensions  gives  a  17x22  sheet — another 
good  size  for  large  office  records.  Ledger  stock  which  is  pre- 
ferably used  for  the  more  permanent  office  records  may  be  had 
on  the  same  basis  as  bond,  the  most  common  size  being  17x22. 

Manila  card-board,  for  work-tickets,  route  tags,  tally  sheets 
and  other  forms  which  receive  hard  usage  in  the  factory,  comes 
in  24x36  and  22x28.  The  first  size  divides  up  nicely  into  6x6, 
4x4,  4x6,  8x12,  3x6,  3x9 ;  the  22x28  into  11x14,  5y2x7  and  4x5 1/2. 
For  tags,  however,  it  is  better  to  select  one  of  the  styles  which 
are  standard  with  tag-makers.  Index  bristol — the  card-index 
stock— comes  in  sheets  251/2x30i/£  and  22y2x28^.  The  first  size 
divides  with  only  a  half  inch  waste  on  either  side  into  3x5  cards, 
and  almost  as  economically  into  4x6  and  5x8.  In  working  out  a 
size  which  must  be  odd,  a  good  method  of  arriving  at  the  most 
economical  dimension  is  to  make  up  a  complex  fraction  of  which 
the  paper  size  is  the  numerator  and  the  trial  dimensions  of  the 
form  the  denominator.  Then  adjust  the  dimensions  until  they 
cancel  with  the  least  amount  of  remainder. 

While  paper  stock  is  available  in  other  sizes  which  cut 
economically  to  many  dimensions,  the  effort  should  be  to  have  as 
few  sizes  as  possible  in  forms.  There  is  wide  latitude  for 
improvement  in  the  average  factory  in  this  respect.  Standards 
are  sometimes  faithfully  observed  on  almost  everything  but 
forms.  Frequently  sizes  are  varied  with  a  purpose,  to  distinguish 
different  forms,  but  it  is  far  better  to  vary  the  color  and  kind 
of  stock  than  the  size.  Since  most  small  forms  of  letter  size  and 
under,  are  filed  at  one  stage  or  another  in  vertical  files,  it  saves 
having  special  files  built  to  standardize  on  the  regular  sizes — 
8^x11,  5x8,  4x6,  and  3x5.  You  can  even  get  along  with  as  few 
as  two  sizes  in  the  factory — 4x6  and  5x8.  The  firm  of  Joseph 
and  Feiss,  have  only  one  size — 5x8  and  even  their  purchase 
order,  which  might  be  full  letter  size,  is  only  5x8.  Some  of 
their  office  records  are,  of  course,  larger.  If  the  time-tickets 
and  all  other  forms  pertaining  to  the  employment  function  are 
made  standard,  all  can  be  filed  away  conveniently  in  manila 
envelopes  (Form  I),  slightly  oversized,  in  a  vertical  5x8  file. 
The  size  of  office  forms — cost  sheets,  payroll,  expense-analysis 


PLANNING   AND   PREPARING   FORMS 


105 


and  so  on — similarly  should  be  determined  in  accordance  with 
the  stock  sizes  of  binders.  These  come  as  small  as  5x8,  then 
Si/oxll,  11x17  and  17x22. 

As  to  the  kind  of  stock  to  be  selected  for  any  given  form, 
discrimination  is  necessary.  The  natural  tendency,  looking  at 
low  first  cost  rather  than  service,  is  to  buy  the  cheapest.  But 
a  form  which  takes  pencil  poorly  and  ink  not  at  all,  and  which 
comes  to  the  office  so  used  up  that  the  information  is  illegible  is 
dear  at  any  price.  Bond  paper  comes  as  light  as  thirteen  pounds 


K  1                                                    DEPARTMENT  INDICATED  BY  AN  (X) 

Order  No. 

PRODUCTION  ORDER  Ian.  by 

Date  Order  Issued 

Quantity 

Plate  No.                 E> 

i 

X 

Date  Due  in  Ship.  Dept 

Qty.  Dally 

Size                     Ton 

Sales  No.    j 

When  Due 
to  Leave 
Depts. 

Dept 

SPECIAL  INSTRUCTIONS 

X 

F 

Cl 

En 

Fit 

Dec 

Pak 

Foreman's  Tally                              Total 

Foreman  Sign  and  Place  in 
Out-Mail  Box  AT  ONCE 
When  Completed 

Signed 

Foreman 

FORM  II:      Clearness,  the  absence  of  needlessly  large  type  and  an  arrangement  which  economizes 

space  and  time  are  the  special  features  of  this  form.      Originally  five  by  eight  inches,  the  card  was 

so  revised  as  to  accommodate  the  information  better  in  four-by-six  inch  space 

to  the  17x22  ream,  but  sixteen  pound  is  about  the  lightest  weight 
that  gives  service  and  for  extra  rough  usage  at  least  twenty 
pound  stock  should  be  employed.  Only  carbon  duplicates  which 
go  no  further  than  the  office  follow-up  file  may  safely  be  of 
minimum  weight  and  the  poorest  quality.  Manila  card  stock 
comes  as  light  as  eighty  pounds,  but  in  this  weight  is  very  flimsy 
and  tears  easily.  One  hundred  and  ten  pounds  is  about  as  light 
as  should  be  used  for  factory  service,  and  where  an  especially 
stiff  form  is  required,  not  less  than  one  hundred  and  forty 
pounds.  The  same  suggestions  apply  to  index  bristol.  Bond 


106 


WRITTEN   STANDARD    PRACTICE 


paper  does  very  well  for  most  factory  forms  that  can  be  padded 
and  also  for  intermediate  or  temporary  office  sheets.  Manila 
stock  is  decidedly  better  than  bond  for  isolated  forms,  and  ledger 
paper  for  permanent  office  records.  Bristol  board  is  preferable 


Goods  Returned  Report 

Report  0ns  Item  Only  on  a  Sheet 
indicate  by  (X)  •Graded  to"  or  -Cause  of  Defect" 

Dal 

a 

Month 

Day 

Plate  No.  and  Size 

Color 

Date  Cast 

Mid.  by. 

Date  En. 

En.  by           Fur.  No. 

Date  Packed 

Packed  by 

Return 

id  by 

Defect 

Graded  to 

2nd 

Coll 

LEn. 

Cause  of  Defect 


Manufacture 

Cratlnj 

Railway 

Consignee 

Otherwise 

Undetermined 

Returned  Ware  Report  Not  Installed 

Indicate  by  (X)  Nature,  location  and  Cause  of  Defect .     Report  One  Item  Only  on  a  Sheet 


Day 


FORMS  III  and  IV:    Both  of  these  forms  have  been  used  by  one  company.    The  form  at  the  back 

was  designed  first,  but  has  been  supplanted  by  the  other  form,  which  is  characterized  by  a  better 

use  of  space,  less  need  for  pencil  work,  and  a  classification  of  information   which  saves  clerical 

time  at  all  points  in  the  routine 

for  information  kept  in  card-index  fashion,  such  as  quotations, 
price  records,  catalog  lists,  machine  cards,  labor-efficiency  cards, 
and  perpetual  stock-inventory  cards. 

Color  also  is  an  important  consideration.    Bond  paper  offers 


PLANNING  AND  PREPARING  FORMS 107 

the  biggest  variety,  as  it  can  be  had  in  practically  every  shade 
and  hue.  And  every  available  color  is  sometimes  needed  where 
a  color  scheme  is  in  vogue.  Where  such  distinction  serves  little 
purpose,  it  is  advisable  to  standardize  on  a  canary  yellow  for 
shop  forms  and  white  or  buff  for  office  copies.  Canary  yellow 
is  a  good  shop  color  because  it  takes  the  pencil  well  and  does 
not  show  dirt.  Moreover,  it  is  easy  on  the  eyes.  Buff  is  to  be 
preferred  for  temporary  office  sheets  and  white  for  permanent 
records,  although  buff  is  favored  by  some  even  for  these,  as 
involving  less  eye-strain.  Bristol  board  is  usually  white, 
although  it  can  be  had  in  buff  and  salmon ;  and  manila  has  its 
own  characteristic  color.  Blue,  green  and  red  manila  stock 
can,  of  course,  be  secured  for  special  purposes.  Red  tags,  for 
instance,  are  much  used  to  distinguish  rush  orders.  But  the 
clear  manila  color  is  the  most  legible. 

ARRANGING  THE  INFORMATION  FOR  COMPACTNESS 
AND  CONVENIENCE 

''PHE  next  point,  and  perhaps  the  most  difficult  to  work  out 
to  the  complete  satisfaction  of  all  hands,  is  the  arrangement 
of  forms.  This,  too,  vitally  affects  the  size.  By  a  poor  use  of 
the  space  on  a  form,  half  of  it  can  easily  be  wasted.  The  4x6 
order  form  shown  (Form  II),  an  excellent  example  of  space 
utilization  and  arrangement  of  information,  originally  was  5x8. 
Every  bit  of  space  is  utilized,  yet  there  is  plenty  of  room  for 
the  entry  of  every  essential  item  and  the  lines  are  spaced  to 
accord  with  typewriter  spacing.  This  particular  form  may 
have  as  many  as  six  duplicates.  Yet  by  the  manner  of  dividing 
the  special  instruction  space  and  by  a  color  scheme,  all  copies 
can  be  prepared  in  one  operation.  A  cross  in  front  of  the  space 
concerning  the  department  in  question  and  the  symbol  of  the 
department  in  the  upper  left-hand  corner  further  facilitate  quick 
identification.  Another  good  example  of  arrangement  is  shown 
in  the  4x6  inspection  form  page  95  of  the  volume,  "Operation 
and  Costs."  Both  forms  were  developed  during  a  campaign 
for  greater  efficiency  in  a  middle- western  ironware  plant. 

A  further  purpose  in  designing  these  forms  was  to  minimize 
pencil  work.    The  principal  marks  required  are  the  check  marks. 


108 WRITTEN   STANDARD   PRACTICE 

and  an  X  to  symbolize  products,  departments  and  operations. 
The  use  of  numbers  or  symbols  for  machines,  furnaces  and  men 
also  diminishes  the  pencil  work.  Not  only  is  space  saved  by  these 
measures,  but  also  the  time  of  those  who  must  fill  in  the  informa- 
tion, while  accuracy  in  reporting  is  of  course  promoted. 

In  lettering  the  spaces  on  a  form,  it  is  well  to  remind  one 's  self 
that  a  form  is  a  written  standard  instruction.  Therefore,  the 
wording  should  be  clear,  unmistakable,  and  strong.  It  is  far 
better  to  say  simply  "Date  Due  in  Shipping  Room — ,"  than 
"Must  be  done  by  — ,"  and  this  in  turn  is  better  than  "Should 
be  out  by  — ."  Simple,  direct  statements  made  in  the  expecta- 
tion of  cheerful  compliance  are  more  effective  here,  as  they 
are  in  spoken  instructions.  The  type,  too,  is  important.  Fairly 
small,  "lower-case,"  vertical  type  is  better  as  a  rule  than  coarse 
or  slanting  letters  or  capitals.  Emphasizing  certain  words  or 
phrases  by  all  caps  or  italics  is  better  done  sparingly.  The 
heading  needs  to  be  larger,  but  by  no  means  as  large  as  com- 
monly seen,  which  only  wastes  valuable  space.  In  the  upper 
left-hand  corner  the  number  or  symbol  of  the  form  should 
appear  in  fairly  large  type,  to  facilitate  re-ordering  and  stock- 
keeping.  Following  it  in  very  small  type  should  appear  the 
purchase  order  number,  quantity  and  the  initials  of  the  printer, 
also  to  facilitate  re-ordering. 

Large  office  records,  particularly  those  on  ledger  paper,  are 
preferably  ruled,  as  much  finer  and  cleaner  column  and  space 
lines  can  thus  be  had,  as  well  as  a  color  distinction  which  is  a 
big  convenience  in  operating  the  form.  If,  however,  the  ruling 
required  is  much  broken  up  and  numerous  block  spaces  must  be 
provided  at  the  top  and  below,  a  more  practical  form  can  be 
obtained  by  having  a  draftsman  draw  it  up  on  linen  or  heavy 
bond  paper  two  or  three  sizes  larger  than  required  and  then 
reduce  by  photographing.  Ruling  has  the  further  advantage 
that  it  makes  a  better  appearance  and  less  confusing  form  where 
both  sides  are  used.  When  there  is  much  rule  work  on  printed 
forms  the  black  ink  shows  through  much  plainer  than  ruled 
lines. 

As  the  expense  of  forms  decreases  rapidly  with  the  quan- 
tity ordered  at  one  time,  every  essential  detail  about  a  form 
needs  to  be  worked  out  before  the  design  is  adopted  as  a  standard 


Ill 


PLANNING   AND   PREPARING   FORMS 111 

and  stocked  in  quantity.  This  is  particularly  true  of  large  ruled 
forms.  If  put  through  hurriedly,  the  chances  are  more  than 
even  that  some  feature  will  prove  defective.  The  new  form  may 
prove  totally  unworkable.  Then  the  entire  lot  has  to  be  wasted. 
If  imperfect  only  in  minor  respects,  it  can  be  used,  but  if  the 
stock  is  large  the  inconvenience  thereby  entailed  may  be  more 
costly  than  to  scrap  the  lot  and  order  a  new  supply  of  a  revised 
design.  It  is  in  this  connection  that  the  plan  of  committee  con- 
sideration has  special  value. 

In  addition  it  usually  is  well  to  print  the  first  supply  of  a 
new  form  on  a  mimeograph  or  duplicating  machine,  or 
even,  for  the  larger  forms,  of  which  a  relatively  small  number 
is  required  at  one  time,  to  have  the  draftsman  rule  up  a  small 
supply.  Then  the  design  can  be  tested  out  before  printing  it 
in  bulk. 

While  economy  increases  with  the  quantity  ordered  at  one 
time,  a  common  mistake  is  to  overbuy  forms.  A  blank  that 
suits  today,  six  months  or  a  year  later  may  not  suit  at  all,  for 
conditions  are  constantly  changing  and  the  system  is  developing. 
A  year's  supply  ahead  is  certainly  the  limit  on  all  forms  used 
in  large  quantities,  even  if  the  storage  space  available  permits 
of  a  larger  stock.  The  length  of  time  required  to  get  a  fresh 
supply  should  be  determined  and  a  red  card  or  other  significant 
marker  inserted  in  the  last  pile  where  the  minimum  occurs. 
This  makes  re-ordering  automatic  and  dispenses  with  any 
inventory  record  on  forms.  When  the  marker  is  reached,  the 
boy  or  clerk  who  is  in  charge  of  the  vault  simply  clips  a  copy 
of  the  form  to  the  marker  and  places  it  on  the  purchasing 
agent's  desk. 

Before  re-ordering,  every  form  should  be  carefully  reviewed 
for  possible  changes  and  time  for  this  should  be  allowed  in 
fixing  the  minimum.  Of  course,  the  purchasing  agent  cannot  be 
expected  to  give  intelligent  criticism  unless  some  routine  for 
adjusting  forms  has  been  provided.  In  one  plant,  a.  note  is 
dictated  in  case  of,  criticism  and  placed  in  a  folder,  to  which 
the  supply  buyer  refers  before  re-ordering.  As  a  final  check, 
each  form  is  also  referred  to  whoever  carries  the  responsibility 
for  plant  efficiency,  for  suggestions;  and  his  0.  K.  is  necessary 
before  either  an  old  design  or  a  revised  one  can  be  re-ordered. 


112 WRITTEN  STANDARD  PRACTICE 

The  same  folder  also  carries  the  standard  instruction  describing 
in  detail  the  operation  of  the  form. 

This  instruction  is  prepared  by  the  responsible  head  or  the 
efficiency  engineer,  who  sends  each  person  interested  a  copy, 
bearing  on  the  top  a  sample  of  the  form  (Chapter  VII).  Thus 
all  get  the  same  idea  about  the  form  at  once.  Among  other 
things,  the  final  disposition  of  the  form  is  herein  indicated — 
whether  it  is  to  be  destroyed  after  it  has  served  its  primary 
purpose  or  filed  for  reference,  and  how  long  kept.  The  control 
value  of  this  provision  will  be  apparent  to  anyone  who  has  had 
to  pass  on  the  disposition  of  stacks  of  old  forms  which  had  been 
accumulating  for  months  and  years,  or  who  has  hunted  for 
records  which  some  clerk,  left  undisturbed,  had  destroyed  on 
his  own  initiative. 

As  with  all  tools,  so  with  forms  and  all  instructions,  proper 
results  follow  only  when  the  preparation,  care  and  control  are 
specialized.  The  points  are  discussed  in  the  next  chapter. 


VII 

ISSUING  AND  CONTROLLING 
INSTRUCTIONS 


ISSUING  a  standard  instruction  is  far  more  than  handing 
out  a  sheet  of  paper.  Since  the  main  purpose  is  to  bring 
about  greater  uniformity  in  transacting  the  business  of  the 
factory,  the  habits  of  nearly  every  interested  person  are  bound 
to  be  disturbed  to  a  greater  or  less  extent.  A  chemical  change 
is  required  in  mental  and  moral  make-up.  Some  will  accept  the 
new  instruction  cheerfully  and  strive  earnestly  to  bring  their 
ways  into  accord.  Others  will  fail  utterly  to  grasp  the  spirit, 
try  as  they  may ;  while  still  others  will  manifest  stubborn  oppo- 
sition. Even  a  simple  shop  form  which  departs  from  the  long 
accustomed  practice  in  some  detail  will  set  up  a  disturbance 
which  requires  tact  and  persistence  to  allay.  To  promulgate 
complete  standard  instructions,  therefore,  calls  for  the  exercise 
of  rare  good  judgment  on  the  part  of  the  manager.  Their  in- 
troduction is  really  an  educational  process,  and  all  the  arts  of 
the  educator  are  needed  for  complete  success. 

To  issue  one  instruction  at  a  time  and  be  sure  it  is  thoroughly 
digested  before  issuing  the  next  in  logical  order  is  the  plan 
followed  by  the  manager  referred  to  in  Chapter  V.  When 
about  to  issue  an  instruction,  he  assembles  all  interested 
persons  in  conference,  and  either  he  or  the  efficiency  engineer 
reads  it  slowly  and  carefully,  explaining  in  minute  detail  the 
purpose  and  intent.  The  men  are  encouraged  to  ask  questions 
and  register  any  objections.  Often  new  light  is  thus  thrown  on 
the  subject.  The  secretary  makes  notes  on  all  suggestions  and 
decisions,  and  the  instruction  is  modified  accordingly. 

When  finally  issued,  a  form  is  attached  to  each  copy,  bearing 


114 WRITTEN   STANDARD   PRACTICE 

the  title  of  the  head  to  whom  directed,  the  date,  and  certain 
blank  spaces  for  the  recipient  to  fill  out.  Signing  and  returning 
this  slip  not  only  acknowledges  receipt  but  signifies  that  the 
signer  has  read  the  instruction  through  carefully,  understands 
it  and  agrees  to  abide  by  it.  Until  all  the  slips  are  returned, 
the  office  copy  is  kept  in  a  follow-up  file,  and  if  after  two  or 
three  days  a  head  fails  to  make  his  return,  he  receives  a  re- 
minder. For  a  week  or  so,  as  he  goes  about  the  factory,  the  effi- 
ciency engineer  watches  the  working  of  each  new  instruction 
closely.  Many  points  will  come  up  which  require  further  eluci- 
dation. He  lends  willing  aid  until  tolerably  sure  that  every 
seeming  obstacle  to  the  application  is  overcome  and  the  men  are 
thoroughly  used  to  the  new  way. 

HOW  TO  HANDLE  SPECIAL  INSTRUCTIONS  AND 
EMBODY  THEM  IN  THE  CODE 

BULLETINS,  or  emergency  instructions,  to  cover  fresh  mat- 
ters that  arise  or  to  amend  previously  issued  standards  that 
some  unusual  situation  discloses  to  be  inadequate  or  in  error,  are 
sometimes  issued  without  the  preliminaries  described,  but  the 
recipient,  in  all  cases,  is  required  to  sign  and  return  the  receipt 
slip.  Before  a  bulletin  is  made  a  standard,  or  an  old  instruction 
revised  and  reissued,  however,  the  heads  are  again  called  into 
conference.  Old  instructions  are  recalled  when  supplanted,  and 
all  except  the  office  copy  are  destroyed.  This  is  placed  in  a 
cabinet  of  obsolete  instructions  and  kept  for  a  record  of  the  de- 
velopment of  the  business.  Bulletins  are  distinguished  from 
regular  instructions  by  using  pink  sheets  for  them.  This  insures 
their  getting  the  proper  attention  and  also  enables  the  caretaker 
to  watch  the  number  of  them  accumulating  in  the  office  file. 
Periodically  he  reports  to  the  efficiency  engineer  as  to  the  bulle- 
tins which  have  neither  been  reduced  to  standard  instructions 
(nor  recalled.  In  this  way  a  menacing  quantity  of  them  is 
avoided. 

Bulletins  are  issued  usually  on  the  initiative  of  the  efficiency 
engineer  or  the  factory  manager,  but  any  shop  head,  on  perceiv- 
ing the  need  for  a  new  instruction,  may  requisition  its  issuance, 
setting  forth  the  points  he  believes  should  be  covered.  The  men 


GIVING   EFFECT  TO   INSTRUCTIONS 115 

are  encouraged  to  do  this,  as  an  instruction  originated  by  their 
initiative  is  assured  of  hearty  observance.  Often,  too,  such  in- 
structions are  intensely  practical.  The  chief  promptly  gives 
these  requisitions  his  personal  attention  and  is  particular  to 
see  that  the  man's  exact  ideas  are  incorporated,  in  so  far  as  they 
harmonize  with  the  general  policy  of  the  institution. 

HOW  INSTRUCTIONS  ARE  ISSUED  AND  CARED  FOR 
IN  ALL  DEPARTMENTS 

Ej^OR  the  safekeeping  of  shop  copies  of  standard  instructions, 
some  convenient  form  of  binder  or  container  is  needed.  In 
this  instance,  a  special  leather  envelope  was  devised,  fitted  with 
clasps  and  of  ample  capacity  to  receive  all  the  instructions  likely , 
to  be  issued  to  any  one  head.  This  envelope  is  kept  in  a  locked 
drawer  in  the  desk  of  the  recipient.  During  working  hours  it 
may  lie  on  his  desk,  for  his  convenient  reference  or  that  of  his 
assistants,  but  out  of  hours,  keeping  it  in  the  locked  drawer 
is  mandatory.  Each  lock  is  unique,  and 'only  the  efficiency  en- 
gineer, production  superintendent  and  works  manager  have  mas- 
ter keys. 

Office  heads  are  provided  with  a  substantial  paper  binder, 
labelled  "Standard  Instructions,"  which  by  rule  is  kept  in  the 
upper  right-hand  drawer  of  the  desk.  The  sheets  come  to  them 
punched  ready  for  insertion  in  the  binder,  and  are  filed  in  the 
order  received. 

Each  instruction  is  issued  to  the  shop  heads  in  a  protecting 
manila  folder,  in  which  it  is  held  by  brass  fasteners.  Bulletins 
or  special  instructions  are  issued  unenclosed,  but  a  folder  is 
provided  in  the  leather  container  to  receive  them  (Form  V). 

Only  one  set  of  instructions  is  issued  to  a  factory  department, 
and  for  this,  the  head  of  the  department  is  held  responsible.  In- 
structions pertaining  to  the  special  duties  of  his  assistants  are 
kept  in  the  department  container.  An  assistant  is  at  liberty  to 
consult  his  instructions  at  any  time,  but  only  at  the  desk  of 
his  superior. 

All  important  office  men,  however,  whether  they  are  heads  of 
departments  or  not,  keep  their  own  instructions,  as  each  has  a 
proper  place  to  do  so.  Each  office  functionary,  in  addition  to 


116 WRITTEN   STANDARD  PRACTICE 

his  own  instructions  and  those  general  to  the  department,  has 
also  the  instructions  of  the  men  immediately  below  and  above 
him,  so  that  he  may  clearly  understand  all  interlocking  duties. 
Each  official  thus  becomes  an  automatic  check  on  his  immediate 
associates,  and  can  shoulder  duties  tangent  to  his  own  in  case 
of  sickness  or  vacation  leaves,  or  can  more  easily  step  into  the 
next  position  ahead  on  its  becoming  permanently  vacant.  To  en- 
able the  department  manager  conveniently  and  unobtrusively 
to  check  on  the  performance  of  his  men,  he  is  provided  with  a 
copy  of  every  instruction  issued  to  his  department. 

STANDARD  INSTRUCTIONS  SIMPLIFY  THE  SELECTION  AND  TRAINING 
OF  NEW  MEN  FOR  ANY  POSITION 

"DK-EAKINGr  in  a  new  official  in  this  factory  evidently  is  sim- 
plified by  the  standard  instructions.  On  a  vacancy  occur- 
ring in  either  the  factory  or  the  office,  which  cannot  be  filled  by 
promotion,  the  employment  man,  upon  being  requisitioned,  re- 
freshes his  memory  by  reading  the  instructions  for  the  position 
to  be  filled.  He  then  makes  his  selection  with  the  duties  clearly 
in  mind.  When  a  man  is  engaged,  after  a  brief  interview  with 
the  head  of  his  department  to  establish  proper  personal  relations, 
he  is  given  his  instructions  to  read.  He  is  told  to  take  all  the 
time  necessary  and  to  ask  questions  freely  about  points  that  are 
not  entirely  clear  to  him.  When  he  takes  hold  a  few  hours  later 
or  the  next  day,  he  is  prepared  to  do  effective  work  immediately. 

Because,  moreover,  his  instructions  are  in  black  and  white,  he 
has  no  occasion  for  acquiring  at  the  outset  an  erroneous  concep- 
tion of  his  duties  and  place  in  the  organization,  which  may  take 
weeks  or  months  to  correct,  if  ever  rectified.  He  is  not  handi- 
capped by  the  forgetfulness  or  carelessness  of  a  personal  in- 
structor. Nor  is  his  viewpoint  colored  by  the  faulty  knowledge, 
or  perhaps  purposely  misleading  counsel  of  some  officious  neigh- 
bor. Clearly  and  definitely  instructed  at  the  start,  he  has  the 
maximum  of  opportunity  to  make  good. 

Shop  rules  and  regulations,  and  general  plant  instructions, 
are  so  issued  as  to  insure  a  similar  benefit  all  along  the  line. 
These  instructions  are  printed  in  an  attractive  booklet,  with  a 
place  in  front  for  identification.  At  the  back  is  a  detachable 


GIVING   EFFECT  TO   INSTRUCTIONS 117 

slip  which  the  man  signs  and  returns,  attesting  not  only  that  he 
has  read  the  book  carefully,  understands  the  conditions  and 
agrees  to  conform  to  them,  but  that  he  agrees  to  constitute  him- 
self a  committee  of  one  to  see  that  the  rules,  in  spirit  as  well 


Folder  for 
Standard  Instructions 


Keep  in  Standard  Instruction  Container 


Remove  from  Container  Only  for 
Reference  on  the  Spot 


Keep  Sheets  Undisturbed 


Dept— 
Head- 
Symbol- 


FORM    V:       When  standard  instructions  are   issued,  the  first  point  is  to  standardize  their  care 

and  use.     These  directions  appear  on  the  folder  which  carries  each  new  instruction  to  the  various 

department  heads  in  the  plant  described  in  the  text.     Instructions  are  kept  in  a  special  container  in 

each  department  and  are  open  for  reference  by  those  interested 

as  letter,  are  obeyed  by  his  fellows.  He  hands  this  slip  to  his 
foreman,  who  before  returning  it  to  the  office  puts  the  man 
through  a  brief  test  to  satisfy  himself  that  the  signature  is  more 
than  perfunctory.  At  the  bottom  of  the  blank  the  foreman  then 
attaches  his  own  signature,  attesting  that  he  has  examined  the 
man  and  found  his  knowledge  of  the  rules  satisfactory.  The 
doubly  signed  slip  is  filed  away  in  the  man's  labor  folder.  On 
leaving,  workmen  are  required  to  turn  in  their  books,  and  they 
may  not  receive  the  final  pay  envelope  until  the  slip,  with 
"Book  Returned"  stamped  or  written  across  the  face  in  red  ink, 
reaches  the  paymaster.  This  provision  is  enacted  not  so  much 
to  prevent  the  promiscuous  circulation  of  the  rule  books  outside 
the  plant,  undesirable  though  this  be,  as  it  is  to  induce  the  proper 
attitude  of  respect  for  the  book. 


118 WRITTEN   STANDARD  PRACTICE 

Besides  the  ordinary  shop  rules  and  regulations,  the  book  con- 
tains full  particulars  regarding  the  workmen's  benefit  plan  in 
vogue,  safety-first  and  fire  precautions,  first-aid-to-the-injured  in- 
structions and  what  to  do  in  case  of  fire  or  explosion,  hints  as 
to  the  care  of  the  person  and  the  value  of  cultivating  proper  per- 
sonal habits.  A  description  of  the  plant  and  its  product,  pleas- 
ingly illustrated,  and  the  names  of  the  principal  officers  and  de- 
partment heads  also  are  included.  It  is  printed  in  both  English 
and  German — the  two  prevailing  tongues  spoken  in  the  plant. 

The  instructions  as  to  fire  and  accident  prevention,  hours  of 
work,  time  and  manner  of  paying  off,  holidays  observed  and 
so  on  are  also  hung  in  a  frame  alongside  of  each  bulletin  board 
and  time  clock. 

Bulletins  to  the  men  at  large,  to  a  department  as  a  whole  or 
to  the  entire  shop,  are  posted  on  the  various  bulletin  boards,  of 
which  there  is  at  least  one  in  each  department.  The  posting 
is  done  by  the  department  heads,  and  each  bulletin  bears  the 
signature  of  the  head  in  addition  to  that  of  the  works  manager. 
Each  head  thus  receives  advance  information  of  every  bulletin 
pertaining  to  his  department,  and  the  fact  that  he  signs  as  well 
as  posts  it  personally,  tends  to  secure  for  it  proper  attention. 
He  also  receives  an  extra  copy  of  each  bulletin  for  his  depart- 
ment file. 

Bulletins  of  special  importance,  particularly  such  as  announce 
a  new  policy  which  is  likely  to  be  misunderstood  and  so  create 
antagonism,  are  first  read  to  the  men  in  meeting  assembled  for 
the  purpose.  The  factory  manager  himself  usually  heads  these 
meetings  and  any  points  of  doubt  or  dissent  are  threshed  out 
then  and  there.  Bulletins  to  a  particular  department  are  always 
prepared  in  consultation  with  the  department  head.  Those  to 
the  plant  as  a  whole  are  issued  only  after  a  conference  between 
the  works  manager,  production  superintendent  and  efficiency 
engineer.  Such  instructions  as  are  not  temporary  are  subse- 
quently embodied  in  the  rule  books  when  next  these  are  revised. 

Just  as  department  heads  are  at  liberty  to  criticise  existing 
standard  instructions  and  to  suggest  new  ones,  so  the  men 
may  register  their  objections  to  any  shop  rule.  They  do  so  on 
the  regular  suggestion  form.  They  are  asked  to  state  their  rea- 
sons in  full  and  to  offer  a  substitute  that  will  be  more  satisfac- 


GIVING   EFFECT  TO   INSTRUCTIONS 


119 


tory.  To  allow  them  merely  to  criticise  without  making  a  con- 
structive suggestion  would  be  encouraging  a  wrong  mental  atti- 
tude. Criticism  is  welcomed  by  this  management,  but  it  must 
be  advanced  in  the  right  spirit  to  receive  respectful  attention. 

Under  this  plan  the  men  come  in  time  to  feel  in  a  measure 
that  the  shop  rules  are  their  rules.    Violations  flagrant  enough 


Checked  by                                 Follow-up  date 
Subject 

Date 

Date 

Date 

Date 

Date 

Date 

FORM  VI:       Three-by-five  cards  of  this  type  are  used  in  the  "automatic"  follow-up  described  in 

this  chapter.     Each  card  fits  in  an  envelope,  which  is  laid  on  the  manager's  desk  while  the  card  is 

being  used  for  follow-up  purposes  on  each  date  indicated.     The  back  as  well  as  front  is  covered  with 

date  columns,  so  that  the  card  has  a  long  period  of  usefulness 

to  be  reported  are  referred  to  a  committee  of  the  men  them- 
selves, and  the  punishment  meted  out  by  this  body  is  usually  far 
more  severe  than  the  management  would  itself  think  wise  to 
administer;  but  it  is  often  borne  uncomplainingly  because  prac- 
tically self-inflicted.  An  account  of  violations  is  also  kept  in  the 
man's  labor  record  and  is  one  of  the  factors  determining  pro- 
motion, or  retention  when  a  cut  in  the  force  is  made. 

Enforcement  of  the  rules  in  this  plant  thus  is  made  virtually 
automatic.  "Wisely  prepared,  wisely  issued,  and  wisely  con- 
trolled, their  proper  observance  is  a  foregone  conclusion. 

Enforcement  of  the  instructions  to  department  heads  is 
naturally  simpler  than  that  of  the  shop  rules,  because  the 
heads  are  on  the  management  side  to  begin  with.  But  the 


120 WRITTEN   STANDARD   PRACTICE 

equally  wise  precautions  surrounding  their  preparation,  issu- 
ance and  control  help  greatly  to  smooth  the  way. 

It  is  human  to  relax  vigilance,  however,  and  even  the  manager 
himself  is  prone  to  forget  to  attend  to  matters  his  instructions 
cover.  Observance,  therefore,  needs  to  be  checked  on  systemat- 
ically, particularly  of  such  instructions  as  apply  only  at  recur- 
ring intervals,  as  every  week,  month,  quarter  or  perhaps  only 
once  a  year.  J.  E.  Richardson,  Chicago  Manager,  Hotpoint 
Electric  Heating  Company,  has  devised  an  exceptionally  good 
plan  for  accomplishing  this.  His  secretary,  who  also  is  in 
charge  of  the  office  file  of  standard  instructions,  operates  a  three- 
by-five-inch  card  follow-up  file.  A  card  (Form  VI)  covers  each 
instruction  that  experience  has  shown  needs  checking  up  at  in- 
tervals. For  example,  some  time  ago  complaint  was  made  as  to 
the  slipshod  manner  in  which  guaranty  tags  and  cartons  were 
being  stamped.  Investigation  disclosed  that  no  standard  in- 
struction had  been  prepared  for  this  item.  One  accordingly  was 
written,  and  a  card  placed  in  the  file,  dated  to  go  to  the  super- 
intendent once  a  month,  as  his  reminder  to  check  the  operation 
in  accordance  with  the  standard  instruction.  The  superintend- 
ent indicates  his  finding  on  the  card  and  returns  it  to  the  office. 
Similar  cards  cover  other  important  items  on  which  the  practice 
is  liable  to  lapse  with  a  change  in  help  or  for  some  other  reason, 
and  which  hence  needs  to  be  compared  at  recurrent  intervals 
with  the  standard. 

A  card  is  also  made  out  for  the  more  important  recurrent  duties 
that  are  liable  to  be  forgotten  or  overlooked,  even  though  they 
are  covered  by  written  standard  instructions.  A  card  goes  to  the 
manager  of  the  Service-Display-Case  department  each  week,  for 
instance,  reminding  him  to  check  up  the  condition  of  the  display 
case,  to  see  that  the  case  is  cleaned,  that  no  samples  are  missing, 
and  that  all  are  properly  arranged.  Another  such  card  goes  to 
the  shipping  clerk  once  a  month,  calling  his  attention  to  the  neces- 
sity of  checking  over  the  stock  on  the  shelves  to  see  that  none  of 
it  has  rusted  and  to  restamp  the  date  on  the  name  plates.  Cards 
are  also  made  out,  one  for  each  appliance  manufactured,  which 
go  to  the  shipping  clerk  in  proper  rotation,  reminding  him  to 
open  a  package  of  each  article  once  every  so  often  to  see  that  the 


GIVING   EFFECT  TO  INSTRUCTIONS 121 

material  is  packed  strictly  in  accordance  with  the  standard 
instructions. 

Each  card  is  kept  in  a  small  manila  envelope,  open  at  the  top 
and  right,  and  with  the  upper  right-hand  corner  clipped  off. 
When  a  card  is  issued,  the  containing  envelope  is  placed  on  the 
manager's  desk  so  that  he  may  be  conversant  with  the  items  to 
be  checked  that  day,  and  also  give  his  personal  attention  to  any 
of  them  if  he  deems  it  advisable.  At  ten  o'clock  each  morning 
the  department  heads  assemble  for  a  conference,  and  in  the  first 
few  minutes  the  reports  are  regularly  received  from  the  various 
heads  on  the  matters  that  have  been  brought  to  their  attention 
earlier  in  the  day  for  checking.  It  is  therefore  incumbent  upon 
them  to  give  the  cards  prompt  attention.  This  arrangement  is 
practically  the  clincher  on  the  follow-up. 

To  differentiate  the  cards,  and  particularly  to  enable  the  clerk 
readily  to  assemble  all  cards  applying  to  any  one  department,  a 
color  scheme  is  observed.  Shipping  department  cards,  for  in- 
stance, are  a  dark  blue,  while  those  to  the  order  department  are 
salmon  and  to  the  accounting  department,  yellow.  The  reverse 
side  is  covered  with  date  columns,  so  that  one  card  lasts  a  long 
time,  in  fact  usually  wears  out  or  becomes  too  dirty  for  further 
use  long  before  the  checking-date  spaces  are  filled. 

Some  follow-ups  shortly  become  unnecessary,  and  as  they  do 
so  the  persons  to  whom  the  cards  are  sent  are  privileged  to  cancel 
them  after  consulting  with  the  guardian  of  the  office  file.  Thus 
the  card  follow-up  plays  an  important  part  in  keeping  the  file 
from  being  cluttered  up  with  out-of-date  instructions — a  danger 
that  must  constantly  be  guarded  against.  Heads  are  also  at 
liberty  to  suggest  longer  or  shorter  follow-up  periods. 

THE  FIRST  RULE  OF  STANDARD  PRACTICE,  "VERBAL  INSTRUCTIONS  DON'T  GO," 
MUST  BE  OBSERVED 

"D  Y  this  plan,  the  enforcement  and  maintenance  of  the  stand- 
ard instructions  is  made  so  nearly  automatic,  that  the  execu- 
tive is  practically  freed  from  all  routine.  He  can  go  away  at 
any  time  without  any  special  arrangements  and  readjustment  of 
the  organization,  and  know  that  the  business  will  go  along  as 
usual.  Routine  matters  are  assured  attention  by  the  card  re- 


122 WRITTEN   STANDARD   PRACTICE 

minders  which  come  up  automatically.  Only  the  matters  that 
are  not  going  through  properly  are  brought  to  his  attention 
specifically,  and  these  are  so  few  that  an  absence  of  a  week  or 
more  involves  no  important  accumulation. 

It  is  important,  once  the  policy  of  conducting  an  establishment 
by  written  standard  practice  instructions  is  adopted,  to  avoid  the 
use  of  verbal  instructions  and  communications.  Of  course,  it  is 
sometimes  necessary  to  issue  an  emergency  instruction  verbally, 
just  as  it  is  to  order  merchandise  over  the  telephone.  But  even 
as  telephoned  orders  are  promptly  confirmed  in  regular  written 
form,  so  verbal  orders  given  in  the  factory  should  be. 

At  first  there  will  be  some  difficulty  on  this  score,  for  it  takes 
time  for  men  habituated  to  word-of-mouth  orders  to  break  off 
the  habit.  The  chief  difficulty  will  not  be  with  those  in  subordi- 
nate positions,  but  with  the  higher  executives,  and  especially  the 
manager  himself.  In  this  respect,  however,,  there  can  be  no  priv- 
ileged characters.  Nothing  quite  so  quickly  makes  the  enforce- 
ment of  written  standard  instructions  ineffective  as  to  have  the 
chief  official  ignore  the  established  procedure.  If  he  wishes  his 
organization  to  operate  smoothly  and  to  leave  him  free  to  lay 
more  ambitious  plans,  let  him  set  the  good  example  of  abiding 
by  the  one  best  way  he  has  been  able  to  set  down  for  each  opera- 
tion, and  the  force  can  easily  be  kept  in  line. 


Part  III 

MANAGEMENT  DUTIES 
AND  DECISIONS 


AUTHORITIES  AND  SOURCES 
FOR  PART  III 


Chapter  VIII.  Contributed  by  Mr.  Porter.  In  addition  to 
principles  and  incidents  drawn  from  many  other  sources,  ex- 
periences of  Frederick  W.  Taylor  and  the  Dennison  Manufactur- 
ing Company  are  cited. 

Chapter  IX.  Contributed  by  Mr.  Murphy  and  Mr. 
Porter  in  collaboration,  and  presenting  the  conclusions  of  both 
in  the  confidential  study  of  many  businesses. 

Chapter  X.  Prepared  in  collaboration  by  Mr.  Murphy  and 
Mr.  Porter,  together  with  contributions  by  J.  George  Fredericks 
and  Mr.  Feiker.  Among  the  plants  and  lines  to  which  par- 
ticular reference  is  made  are  woodworking,  metal-molding,  auto- 
mobile and  motorcycle  manufacturing,  corset,  cloak,  and  suit 
making,  the  manufacture  of  bar  fixtures,  glass-ware,  stoves, 
motors,  coke  and  its  by-products,  machine  tools  and  cereal  foods. 

Chapter  XI.  A  collaboration  by  Mr.  Murphy  and  Mr. 
Porter,  with  further  material  contributed  by  Ford  W.  Harris, 
consulting  engineer,  formerly  with  the  Westinghouse  Electric  and 
Manufacturing  Company.  Among  the  lines  and  plants  to  which 
special  reference  is  made  are  the  Link-Belt  Company,  Eastman 
Kodak  Company,  National  Cash  Register  Company,  an  elec- 
trical manufacturer,  a  tile  manufacturer,  a  watch  manufacturer, 
a  maker  of  water  colors,  and  a  motor  truck  manufacturer. 

Chapter  XII.  Written  by  Mr.  Porter  in  collaboration  with 
Mr.  Murphy.  Extracts  are  also  given  by  James  Hartness, 
former  president,  American  Society  of  Mechanical  Engineers, 
A.  Hamilton  Church  and  Mr.  Feiker.  Industries  and  organiza- 
tions from  which  particular  instances  are  drawn  are  the  Clothcraf t 
Shops  of  the  Joseph  and  Feiss  Company,  metal-ware  manufac- 
ture, bicycle,  motorcycle  and  automobile  manufacture  and  steel 
mills. 


VIII 

KEEPING  THE  ORGANIZATION 
EFFECTIVE 


PARTIALLY  fill  a  cup  and  it  may  be  handled  roughly;  but 
a  vessel  full  to  the  brim  must  be  carried  with  the  utmost 
care.  So  the  management  of  the  average  plant  is  by  no 
means  so  exacting  a  task  as  to  keep  a  highly  pitched  factory 
operating  smoothly  and  evenly,  without  either  over-pressure  or 
let-up  in  any  department. 

During  the  early  and  rapid  growth  of  an  organization,  the 
manager's  work  may  be  likened  to  the  roughing  cuts  of  the 
machine  tool.  The  physical  progress  is  evident;  measurable  re- 
sults are  immediate  and  so  gratifying  that  a  little  crudeness  here 
and  there,  a  mistake  or  two  in  man-handling  or  even  in  policies, 
seems  not  to  matter.  A  new  and  eager  demand  is  perhaps  clamor- 
ing for  increased  output.  The  constant  novelty  being  injected 
into  the  situation  tends  to  keep  all  hands  alert.  Young  and 
ambitious  men  sense  opportunity  in  every  change,  and  their 
enthusiasm  is  infectious.  Turning  your  organization  up  to  ever 
higher  refinements,  however,  like  the  finishing  cuts  of  the  preci- 
sion lathe,  requires  skill,  patience  and  accuracy.  Lapses  from 
standard  in  such  an  organization,  also,  are  more  quickly  noticed 
and  more  demoralizing  in  their  example.  Management,  which  so 
often  inclines  to  be  spasmodic,  must  be  maintained  in  the  highly 
systematized  plant  even  more  carefully  than  operation. 

These  conditions  define  the  manager's  responsibility.  He  is  not 
merely  the  master  workman,  but  rather  the  one  man  in  the  plant 
who  can  have  adequate  plans  made  for  the  future,  can  pass  upon 
them  and  can  put  them  into  action.  A  well-chosen  scheme  of 
organization,  with  duties  clearly  defined  and  responsibility  defi- 


126 MANAGEMENT  DECISIONS 

nitely  focused,  men  carefully  selected  for  special  fitness  and 
promise,  instruction  and  supervision  made  almost  automatic  by 
means  of  written  standard  practice  instructions — these  provisions 
may  relieve  him  almost  entirely  of  detail  (Figure  XXIV) ;  yet 
the  business  will  always  need  his  guiding  hand  and  the  inspira- 
tion of  his  leadership. 

Every  business  has  its  constants,  in  other  words,  and  these  may 
be  reduced  to  routine.  No  business  man  flatters  himself,  how- 
ever, that  he  has  standardized  everything  or  cleared  his  course  of 
perplexities  and  critical  situations  calling  for  the  utmost  exer- 
cise of  his  powers.  Variable,  even  undetected  factors  are  involved 
in  the  course  of  every  enterprise.  No  one  can  say  with  certainty 
what  the  men  in  the  plant  will  do  from  day  to  day,  or  what  whims 
or  fads  will  seize  upon  the  trade,  what  disputes  come  up  in  the 
distribution  of  the  product,  what  the  political  and  economic 
future  may  be.  To  keep  his  perceptions  sensitive  for  indications 
of  changed  conditions  and  his  faculties  clear  to  deal  with  new 
problems,  to  know  from  what  quarters  trouble  may  be  expected 
and  how  to  work  out  the  solution  of  the  difficulty,  are  essentials 
in  the  manager's  personal  equipment  for  his  work. 

SUPERINSPECTION— THE  CENTRAL  PRINCIPLE  IN  HOLDING 
AN  ORGANIZATION  UP  TO  STANDARD 

HP  0  get  too  deep  into  the  detail  is  a  blunder  that  always  involves 
a  manager  in  grave  consequences.  No  other  result,  however, 
is  more  serious  than  his  loss  of  a  fresh  viewpoint  upon  the  busi- 
ness. The  individual  workman  tends  to  become  blind  to  his  own 
faults.  Routine  grows  stale  and  invites  neglect.  Errors  easily 
creep  into  the  organization  and  once  in,  are  hard  to  eradicate. 
The  executive,  too,  may  easily  become  accustomed  to  wrong  con- 
ditions. Without  the  ability  to  maintain  a  detached  or  imper- 
sonal view  of  himself  and  his  organization,  he  cannot  hope  to 
detect  errors  quickly,  bring  them  under  control  and  supply  safe- 
guards against  their  recurrence. 

"I  am  positive,"  said  a  manager  recently,  "that  I  could  go 
into  the  factory  yonder  and  make  suggestions  that  would  save 
lots  of  money.  I  make  no  claim  of  perfection  for  our  own  plant, 
but  I  do  believe  it  is  operated  much  more  efficiently  than  my 


UNITED 
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y    .  /  \  /              "v 

31 


-  -  -'  @  i       m  .  .  |  gpj  .  ;^i^iiHHi^^B!iHil^H 

Two  methods  of  visualizing  conditions  and  problems  for  the  manager  are  here  shown:  below,  graphs 
in  which  are  indicated  by  colors  the  amount  of  designing  department  business  charged  monthly  fo 
three  successive  years;  above,  the  map  and  tack  method  by  which  this  same  construction  compan 
locates  its  prospects  and  customers  in  order  that  sales  can  be  handled 


Fitting  production  to  the  trade  is  further  illustrated  here.     By  colored  tacks  and  silk  cords  on  the 

m-ip,  salesmen  are  routed  and  directed  from  the  home  office.     The  wall  board  carries  the  names  and 

date  schedules  of  all  contracts  ahead  as  an  aid  to  the  supply  and  production  officials  in  scheduling 

and  pushing  their  work 


ORGANIZATION   UPKEEP 129 

neighbor's.  In  the  same  way,  I  suppose,  some  one  with  a  clearer 
sense  of  efficiency  than  I  possess  could  come  into  our  plant  and 
show  us  many  things  we  could  do  better.  In  fact,  I  would  gladly 
pay  a  man  fifty  dollars  now  and  then  to  point  out  what  we  are 
unconsciously  doing  wrong  and  what  we  should  be  doing  but 
have  not  thought  of." 

Superinspection,  or  "exceptions,"  as  Taylor  called  it,  is  what 
this  manager  had  in  mind — a  principle  perhaps  more  important 
than  any  other  in  the  maintenance  of  an  organization.  Taylor's 
method  of  inspecting  ball  bearings,  installed  by  him  in  an  east- 
ern factory,  affords  a  concrete  example.  The  primary  inspection 
was  done  by  a  group  of  girls.  For  every  so  many  girls,  an  over- 
inspector  was  appointed,  whose  duty  it  was  to  pick  out  at  random 
and  with  the  utmost  care  superinspect  boxes  of  inspected  balls. 
None  of  the  girls  knew  when  a  portion  of  her  work  would  be 
examined,  and  consequently  all  were  stimulated  to  maintain  the 
most  exacting  care.  Under  these  conditions,  it  became  practicable 
to  place  the  inspection  on  a  piece  basis  and  without  sacrificing 
quality,  to  cut  the  cost,  increase  wages  and  shorten  hours. 

In  a  valve-making  plant,  the  superinspection  principle  has 
been  applied  more  broadly.  Here  the  heads  of  the  various  de- 
partments are  organized  to  keep  a  critical  eye  on  one  another's 
domains  and  once  a  month  to  render  an  itemized  report.  Coax- 
ing and  persistency  on  the  part  of  the  manager  were  required 
to  get  the  plan  working,  for  at  first  the  men  not  only  were  re- 
luctant to  pass  judgment  on  others  but  also  were  sensitive  of 
criticism.  Once  their  reserve  was  thawed  out,  however,  each 
set  himself  to  keep  his  own  record  clear  and  "get  something" 
on  the  others.  This  was  precisely  the  end  sought  by  the  manage- 
ment— to  put  every  man  on  his  mettle  as  to  the  conduct  of  his 
own  department. 

In  a  similar  way  the  manager,  if  he  has  maintained  his  sense 
of  proportion,  can  check  upon  the  entire  business.  As  a  rule, 
he  keeps  clear  of  small  matters.  Now  and  then,  however,  he 
jumps  in  and  "sees  a  job  through"  with  the  men.  If  the  work 
has  dropped  below  standard,  he  brings  his  fresh  viewpoint  to  it 
and  puts  it  back  where  it  belongs.  In  the  process,  he  renews 
his  intimate  knowledge  of  his  business.  More  important  still  is 
the  example  he  sets  for  his  men  and  the  bond  he  establishes 


130 MANAGEMENT  DECISIONS 

with,  them  by  his  readiness  to  lift  on  the  load.  "Significant 
details,"  one  manager  terms  these  selected  matters  into  which 
he  digs  from  time  to  time  in  order  to  assure  himself  that  the 
business  is  not  growing  away  from  him. 

The  general  superintendent  of  one  of  Chicago's  largest  plants 
furnishes  an  example  of  this  type  of  control.  He  purposely  dis- 
regards factory  hours,  coming  and  going  when  he  pleases,  almost 
never  arriving  at  exactly  the  same  hour  twice  and  entering  each 
time  by  a  different  way.  Sometimes  he  goes  to  his  office  first. 
Again,  he  will  come  in  by  one  of  the  factory  doors,  to  reach  his 
desk  perhaps  an  hour  later  after  an  irregular  trip  through  the 
plant.  Occasionally  he  is  down  before  anyone  else.  Again,  he 
will  stay  after  all  hands  are  gone.  The  men  throughout  the  plant 
never  know  just  when  to  expect  his  genial  presence  and  his  rak- 
ing glance.  This  uncertainty  has  the  effect  of  keeping  them 
"on  their  toes"  all  the  time.  The  result  is  literally  that  of 
omnipresence,  but  of  a  far  better  and  more  effective  kind  than 
that  of  the  old-time  manager  whose  mind  had  to  go  over  every 
detail  and  0.  K.  every  trifle. 

SIFTING  SIGNIFICANT  DETAILS  FROM  THOSE  THAT  LACK 
IMPORTANCE  FOR  THE  MANAGER 

A  NOTHER  factor  in  maintaining  a  fresh  perspective  is  to  rid 
every  case  of  non-essentials  before  it  comes  to  a  decision. 
This  executive  when  in  his  office  cleans  up  an  enormous  mass  of 
work  in  a  short  time;  and  his  decisions,  though  usually  given 
quickly,  are  almost  never  in  error.  He  always  has  his  facts 
boiled  down  in  the  simplest  form  before  him.  Graphs,  charts, 
significant  facts  and  other  evidence  are  worked  out  before  the 
matter  reaches  him.  When  he  calls  a  department  manager,  too, 
he  expects  him  to  have  every  essential  fact  ready  for  action.  To 
give  the  chief  the  kernel  of  a  matter  in  the  simplest  way  is  an 
established  part  of  the  routine. 

Here  and  there  an  executive  is  found  with  this  rare  ability  to 
maintain  a  detached  point  of  view.  Such  a  man  is  his  own  con- 
sulting manager.  Every  executive  should  aim  to  acquire  this 
ability.  But  "outside"  supervision  also,  as  has  been  suggested, 
has  its  place  and  value.  Any  new  employee  has  a  certain  ability 


ORGANIZATION  UPKEEP 


131 


A                       One  plant  Has  ram  renewing  floMi  contorts 

Buildings       Lj     AnoUnr  ctocb  ap^iditfaM  of  bufldlngs  moatMy  urf  to  iweMsani  rapilra 
1                                          done  promptly 

Lj          A  third  company  has  put  Its  Janitor  work  oo  a  task  and  boras  basis 

= 

rj  Sherwln-Wllllams  Company  have  committee  Inspoctlon  of  powir  Iwust  monthly 

!j                        Tabor  Company  overhaul*  bolts  oo  a  schodol* 

"-J               Another  company  Us  motors  Inspected  and  tastad  regularly 

Bullard  Company  Inspects  machines  on  schedule,  anticipating 
repair*  *o  far  as  possible 

Machinery 
and  Tools 

link-  Bert  Company  bas  alt  tools  examined  and  put  In  condition 
when  returned  to  storeroom 

Kohler  Company  has  •equipment  engineer  who  devotes  Ms  time  to  Inspection 
of  machines  and  tools,  and  reports  monthly  to  executive  committee 

Adopt  a  Fixed! 
Policy  towards  [I 
MsintenancB  1 

Western  manufacturer  takes  »  trip  each  year  to  see  the  most  up-to-date  plants, 
and  checks  up  Ms  methods  with  theirs 

Manufacturing 
Methods 

|   On*  company  has  amethods  engineer  who  Is  busy  constantly  on  development 

Function  of  tool  Apartment  under  Taylor  system 

Labor  Efficiency 

{lames  Harkntss  recommends  a  "human  report*  annually  as  well  as  a 
treasurer's  report  • 

An  Industrial  counselor  conducts  Industrial  audits  every  so  often 

rj                       Many  companies  have  books  regularly  audited 

Systems 
and  Methods 

-)           Several  have  continuation  arrangement  with  efficiency  engineers 

|                                      form  before  reordering 

Hotpolnt  Electric  Heating  Company  have  an  automatic  follow-up  on  all 
Instructions,  which  develops  need  for  changes  In  instructions 

OSL 

1  At  Kohler  Company  It  Is  business  of  efficiency  engineer  to  check  up  observation 
of  standard  Instructions  and  to  keep  them  up  to  date 

I  One  company  puts  Its  'policies  under  microscope  once  a  year  and  revises  them 
fl                                    to  silt  changed  condition* 

L      Policies 
"j    bi  General 

|         e^^Wtab^^^P^»hte^M 

J   »«t  of  the  duty  of  .efficiency  engineer  to  review  them  from  time  to  time  and 
|    it  least  once  a  year  to  report  to  executive  committee  suggesting  alterations 

FIGURE  XXIV:  In  dealing  with  buildings,  tools,  stores,  men,  methods  and  policies.manufacturers 
are  discovering  that  the  best  results  are  to  be  had  by  continual  rather  than  spasmodic  watchfulness. 
Thus,  maintenance  is  coming  to  be  a  general  policy,  and  definite  follow-up  methods,  as  indicated, 
have  been  devised  to  insure  the  care  of  every  factor  on  which  the  success  of  the  enterprise  depends) 


132 MANAGEMENT  DECISIONS 

to  criticise  and  make  suggestions.  The  consultant  who  is  familiar 
with  methods  in  many  plants,  in  a  much  greater  degree  is  able 
to  correct  bad  conditions  and  make  suggestions.  Managers 
frankly  recognize  the  value  of  audit  service  to  check  their  ac- 
counting and  of  inspection  by  insurance  specialists  to  catch  up 
the  weak  links  in  their  scheme  of  fire  protection.  Periodical 
review  by  efficiency  engineers  from  without  is  simply  a  further 
application  of  the  same  principle.  It  puts  not  only  the  organiza- 
tion, but  the  manager  as  well,  in  the  position  of  the  workman 
who  knows  that  the  trained  eye  of  his  superior  will  rest  on  bits 
of  his  work  taken  at  random  from  the  day 's  output. 

HOW  TO  MAINTAIN  THE  ORGANIZATION  IN  RUSH  AND  SLACK  SEASONS 
—PUTTING  RETRENCHMENT  ON  A  STABLE  BASIS 

A  MONG  the  tests  of  a  manager's  clearness  of  vision,  none  are 
perhaps  more  searching  than  the  call  for  well-considered 
readjustments  which  comes  with  rush  or  slack  times.  In  such 
periods  the  executive  who  is  blinded  by  detail  and  easily  swayed 
by  surface  conditions,  will  in  the  one  case  conduct  the  business 
wastefully,  or  in  the  other  retrench  to  the  point  of  crippling 
his  organization.  But  men  and  the  organization  in  which  they 
are  united  are  not  far  different  from  an  electric  motor — they 
work  efficiently  only  when  they  are  fully  loaded,  with  just  enough 
overload  to  keep  the  pressure  up.  How  to  keep  the  pace  and 
maintain  enthusiasm  when  business  slackens  is  therefore  a  real 
problem. 

A  manufacturer  who  was  investigating  one  of  the  model  estab- 
lishments in  which  the  Taylor  system  is  in  operation,  put  the 
problem  of  slack  times  to  its  manager.  "It's  Taylor's  idea," 
the  manager  answered,  "to  take  men  from  the  shops  for  the 
planning  department.  When  business  is  dull  these  men  return 
to  their  places  in  the  shop  and  the  less  efficient  of  the  regular 
shop  men  are  dropped.  As  every  job  is  on  a  task  basis  and  the 
man,  to  earn  his  bonus  or  differential  piece  rate,  has  to  do  his 
work  in  the  allotted  time,  the  fact  that  the  shop  is  not  crowded 
with  work  has  no  effect  on  the  pace  maintained.  As  in  the  central 
station,  so  many  power  units  are  simply  cut  out  or  thrown  in. 
The  factory  works  less  days  a  week  or  less  hours  a  day,  but 
always  at  the  same  rate." 


ORGANIZATION   UPKEEP 133 

Here  again  is  seen  a  principle — that  of  conservation  of  energy 
or  momentum.  An  express  train  speeding  at  sixty  miles  an  hour 
between  two  terminal  points  may  burn  less  coal  than  a  local  which 
makes  the  way  stations  at  a  maximum  of  forty  miles  an  hour. 
To  overcome  the  inertia  in  making  each  stop  and  getting  under 
way  again  accounts  for  the  extra  consumption  of  power.  So  it 
is  with  a  factory  organization.  Decrease  the  hours  of  work, 
lessen  the  number  of  men  if  you  must,  but  maintain  the  rate 
of  work  if  you  would  keep  your  organization  permanently  up 
to  standard. 

Slack  periods  are  an  exigency  confronting  every  business  at 
times,  even  though  the  policy  of  making  to  stock  may  bridge 
ordinary  slumps  in  demand.  But  the  let-down  which  threatens 
at  such  times  is  by  no  means  the  most  severe  strain  an  organiza- 
tion undergoes.  Such  occasions  indeed  are  often  opportunities 
in  disguise.  Thought  naturally  turns  in  slow  times  to  lopping 
off  waste,  taking  up  slack  and  tuning  up  buildings  and  equip- 
ment for  busier  days.  Wisely  handled,  by  a  manager  who  sees 
values  truly,  this  fight  against  lost  motion  tones  up  the  health 
of  the  concern.  In  the  rush  of  busy  periods,  however,  par- 
ticularly if  prosperity  is  unbroken  for  a  number  of  years,  the 
natural  tendency  to  extravagance  flourishes  all  along  the  line — 
if  building,  to  build  too  ambitiously;  as  regards  equipment,  to 
invest  too  heavily  in  new  and  costly  devices ;  in  the  case  of  sup- 
plies, to  be  profligate;  with  salaries  and  wage  increases,  to  be 
over-generous.  The  result,  when  hard  times  ensue,  is  a  sudden 
tightening  of  the  purse  strings.  Stern— often  excessive — re- 
trenchment measures  are  adopted.  Usually  the  men  are  the 
first  to  suffer.  Either  there  is  a  wholesale  slashing  of  pay  or 
a  wholesale  lay-off,  or  both. 

An  organization  can  be  dealt  no  more  stunning  blow.  Enthu- 
siasm is  dampened,  loyalty  weakened,  morale  destroyed.  Recu- 
peration is  slow  and  difficult.  In  some  instances,  the  former  high 
standard  is  regained  only  after  years  of  arduous  effort.  The 
most  valuable  asset  of  any  business,  organization  momentum, 
has  been  dissipated,  and  to  accumulate  it  again  requires  not  only 
time  and  money,  but  also  the  performance  a  second  time  of  much 
creative  work  already  done  by  the  manager  himself.  What 


134 MANAGEMENT  DECISIONS 

executive  is  equal  to  such  demands,  if  repeatedly  levied  upon  his 
powers? 

So  emergencies — the  hills  and  valleys  on  the  road  the  business 
travels — are  better  anticipated  than  fought  through.  Retrench- 
ment itself  has  in  some  concerns  been  brought  under  a  definite 
policy  which  keeps  it  on  an  efficient  level  at  all  times.  In 
one  plant  the  office  manager  under  instructions  derived  from 
weekly  conferences  with  the  executive  committee,  to  which  he 
regularly  reports,  keeps  the  hand  of  wise  economy  upon  all 
controllable  items.  "Working  closely  with  the  purchasing  agent 
he  was  able  to  suggest  a  slight  change  in  material  which  without 
deterioration  in  the  quality  of  the  product  saved  five  hundred 
dollars  per  month.  Altering  another  product  to  come  under  a 
parcel  post  and  express  weight  limit  saved  three  hundred  dollars 
on  the  first  shipment. 

A  widely  known  department  store  has  developed  an  economy 
committee  plan  which  equally  well  fits  the  needs  of  a  manu- 
facturing organization  and  in  some  cases  has  already  saved 
manufacturers  from  the  bitter  tonic  of  deep  retrenchment  after 
boom  times.  This  committee  (Figure  XXV)  is  made  up  of  one 
carefully  chosen  delegate  from  each  of  the  main  divisions  of 
store  activity — office,  operating,  advertising  and  merchandising. 
Through  their  wide  acquaintance  and  the  notices  they  author- 
ized in  the  weekly  house  organ  which  goes  to  all  employees, 
these  delegates  soon  became  the  focus  of  ideas  on  both  savings 
and  wise  investments.  The  president  of  the  company  dropped 
a  word  to  one  member  which  set  up  an  investigation  and  cut  the 
lighting  bill.  From  the  humblest  employees  came  several  equally 
profitable  suggestions. 

The  routine  was  to  appoint  a  sub-committee  to  follow  out  each 
promise  of  economy.  This  committee  always  included  employees 
whose  position  and  training  would  enable  them  to  take  a  fresh 
yet  expert  view  of  the  outlay  under  fire.  The  sub-committee 
handed  its  report  to  the  secretary  of  the  permanent  committee, 
which  then  digested  the  facts  and  sent  duplicate  reports  simul- 
taneously to  the  head  of  the  department  on  whom  the  responsi- 
bility rested  and  to  the  general  manager.  While  this  report 
was  only  advisory,  the  department  manager,  under  the  combined 
pressure  of  store  spirit  and  scrutiny  by  his  superior,  was  certain 


ORGANIZATION   UPKEEP 


135 


either  to  take  the  desired  action  or  to  make  a  case  against  it. 

In  every  organization,  some  one  should  make  it  his  business  to 
challenge  every  item  of  expenditure  in  this  constructive  way. 
The  "retrenchment  manager,"  as  he  might  be  called,  needs  to  be 
a  man  thoroughly  familiar  with  the  policies  of  the  company  as  to 


How  a  Store  Organization  Standardized  Retrenchment 


FIGURE  XXV:  Retrenchment  is  dangerous  if  not  done  with  a  steady  hand,  avoiding  both  extrava- 
gance and  stinginess.  In  a  department  store  a  permanent  "economy  committee"  watches  the  loose 
ends.  Delegates  from  the  four  main  departments  make  up  the  committee,  which  appoints  sub- 
committees expert  in  any  cost  problem  to  be  studied  and  recommends  action  in  a  duplicate  report  to 
the  department  head  concerned,  and  the  general  manager 

cost  of  product,  quality  to  be  maintained  and  service  to  be  ren- 
dered— a  man  of  no  false  economies,  yet  with  a  conscience  stern 
against  waste  of  every  sort,  who  begrudges  every  penny  spent, 
the  sound  economic  wisdom  of  which  cannot  be  justified.  The 
committee  on  economy  is  even  better  fitted  to  develop  sound 


136 MANAGEMENT   DECISIONS 

policies  governing  expenditures.  In  either  ease,  however,  the 
work  must  be  more  than  merely  critical  if  it  is  to  be  permanent. 
Putting  money  in  the  bank  is  not  the  object  of  a  business  organ- 
ization. The  true  aim  should  be  to  lay  out  all  possible  funds, 
but  only  in  such  ways  that  every  item  is  an  investment  of  the 
highest  possible  grade. 

HOW  WISE  AND  FAR-SIGHTED  FINANCIAL  POLICIES 
HAVE  BEEN  ASSURED 

"M  OT  to  retrench  too  deeply  in  hard  times,  so  E.  H.  Harriman 
affirmed,  requires  the  highest  qualities  of  management.  To 
avoid  the  penny -wise  view  of  both  expenditures  and  profits — to 
deal  justly  with  the  investment  and  the  good  will  as  well  as  with 
the  board  of  directors  and  the  financial  backers,  is  a  task  which 
few  managers  may  safely  delegate.  Domination  by  short-sighted 
money  interests  is  always  a  peril  to  effective  operation.  By  op- 
posing the  creation  of  the  proper  reserves,  the  accumulation  of 
an  ample  surplus,  and  the  improvement  of  the  properties,  and  by 
neglecting  the  friendship  of  workmen,  customers  and  the  public, 
such  stock-holders,  for  the  sake  of  present  dividends  and  easy 
berths,  sometimes  jeopardize  the  whole^  future  of  an  enterprise. 

It  is  the  statement  of  an  experienced  industrial  consultant  that 
most  factories  fail  in  the  going-to-seed  period  when  heavy  de- 
mands develop  for  replacement  of  worn-out  buildings,  equipment, 
methods,  plans  and  men.  Profits  which  should  have  been  reserved 
from  earlier  years  to  care  for  these  needs — men  who  should  have 
been  developed — are  lacking.  In  the  face  of  such  short-sighted 
control,  what  could  be  more  natural  than  the  necessity  of  re- 
organization and  "a  new  start"? 

"After  the  early  failures  on  account  of  a  lack  of  financial 
support  or  other  miscalculation,"  says  this  engineer,  "the 
history  of  most  industrial  failures  seems  to  be  that  the  critical 
time  comes  through  a  lack  of  management  foresight  in  not  set- 
ting aside  reserves  to  offset  the  wasting  away  of  capital  invested 
in  equipment.  When  deterioration  and  obsolescence  have  worn 
out  the  plant  and  machinery,  and  there  is  no  reserve  fund  out 
of  which  to  replace  them,  then  comes  the  critical  period.  The 
managers  simply  have  used  up,  or  by  selling  under  costs  have 


ORGANIZATION   UPKEEP 137 

given  away  their  fixed  capital  investment.  With  each  industry 
this  period  preceding  the  crisis  would  be  different,  but  in  gen- 
eral it  would  be  between  ten  and  fifteen  years.  In  my  estimation, 
this  is  worse  than  paying  dividends  out  of  capital. ' ' 

In  some  instances,  the  manager  has  shown  himself  sufficiently 
strong  and  far-sighted  to  arrange  financial  control  in  a  broad  and 
permanent  way.  In  the  Dennison  Manufacturing  Company, 
the  present  head,  on  succeeding  his  father,  inaugurated  a  radi- 
cally new  form  of  corporate  organization  designed  to  develop 
the  higher  employees  to  share  with  him  constantly  both  execu- 
tive and  financial  responsibilities.  What  he  calls  "industrial 
partnership  stock"  has  been  created.  This  may  be  held  only  by 
responsible  employees  during  their  connection  with  the  company 
and,  under  ordinary  conditions,  it  alone  has  voting  power.  The 
former  common  stock  was  converted  into  first  preferred  stock 
with  a  fixed  dividend  rate.  Second  preferred  stock  bearing  a 
slightly  lower  fixed  rate  also  was  created,  for  which  the  indus- 
trial partnership  stock  may  be  exchanged  when  an  employee 
who  is  leaving  still  wishes  to  retain  a  money  interest  in  the 
corporation. 

The  two-fold  wisdom  of  this  plan  is  evident.  Not  only  does 
it  protect  the  business  against  exploitation  by  outside  finan- 
cial interests,  but  it  is  also  calculated  to  arouse  in  every 
responsible  man  a  strong  proprietary  interest  for  wise  main- 
tenance and  sound  growth.  The  incentive  is  powerful  for  each 
share  holder  both  to  do  his  best  and  to  insist  upon  the  most 
effective  pace  in  other  departments.  Owners  of  the  voting  stock 
do  not  need  to  be  urged  to  go  to  school  to  the  manager,  but  are 
as  eager  as  he  to  see  his  policies  perpetuated.  Superinspection, 
under  this  plan,  is  always  at  work  throughout  the  business. 

An  organization  is  an  intricate  machine  which,  well  main- 
tained, should  be  in  better  condition  tomorrow  than  today. 
To  make  this  not  only  his  own  ideal,  but  that  of  his  men,  may 
well  be  the  manager's  prime  aim.  Excessive  speeds  and  slug- 
gish operation  alike  are  bad  for  both  men  and  machines.  It  is 
for  the  chief  to  serve  as  the  balance  wheel,  avoiding  both  ex- 
tremes and  keeping  supply  and  demand  steady  to  each  other. 
While,  therefore,  many  elements  are  necessary  to  business  suc- 
cess— strategic  location,  healthful  surroundings,  well  designed 


138 MANAGEMENT   DECISIONS 

and  soundly  constructed  buildings,  up-to-date  equipment,  cor- 
rect and  scientific  accounting,  carefully  planned  and  scheduled 
operation,  well  organized  inspection  forces,  contented  workmen 
and,  for  manufacture,  a  product  the  public  needs,  the  right 
leader  to  direct  the  organization  is  after  all  the  great  requisite. 
With  him  to  initiate,  to  advise,  to  inspire,  to  correct,  to  lend  a 
hand — to  keep  the  plant  in  line  with  the  market,  to  look  ahead 
and  correct  the  course  of  policy — the  business  may  be  expected 
to  acquire  and  maintain  smooth,  powerful  momentum. 


IX 

HOW  THE  MANAGER 
SETS  THE  PACE 


AFTER  a  ten  years'  record  perhaps  as  brilliant  as  that  of 
any  concern  in  America,  a  certain  corporation  for  two  or 
three  years  has  been  slowing  down.  The  sales  forces  have 
shown  less  natural  enthusiasm  and  at  times  have  had  to  be 
driven.  Several  misfortunes  have  befallen  the  concern,  and,  as 
is  so  often  the  case  after  a  concern  outgrows  the  one-man  stage, 
these  have  not  been  met  with  the  old-time  spirit.  The  chief  has 
made  several  far-reaching  decisions  which  have  been  severely 
criticised  by  his  own  men.  Outwardly  the  company  is  greater 
than  ever ;  in  the  spirit  for  which  it  was  formerly  famous,  some- 
thing seems  to  be  lacking. 

Age  is  coming  upon  the  manager;  and  with  age,  less  under- 
standing in  leading  his  men.  Elusive  as  is  the  change,  his  entire 
organization  has  felt  the  chill  of  it  and  checked  its  momentum. 
For  every  manager  is  the  pace  maker.  It  is  his  spirit  which  unifies 
the  organization  and  sets  the  pitch  of  courage  and  optimism, 
patience  and  thoroughness.  Let  him  establish  a  high  standard 
of  personal  conduct  and  his  men  will  strive  to  measure  up  to  it. 
Let  him  be  eminently  fair  and  just  in  his  decisions  and  those 
under  him  will  gain  in  these  qualities.  Let  him  show  an  under- 
standing of  what  his  men  are  working  for,  what  they  risk  and 
what  they  are  individually  ambitious  to  accomplish  and  they  are 
more  likely  to  understand  his  position.  On  the  other  hand,  let 
him  be  pessimistic,  dictatorial  or  biased,  and  every  member  of 
his  organization  will  take  the  defensive  against  others.  Wherein 
he  has  failed  to  master  himself,  his  organization  will  manifest 
weaknesses.  Its  efficiency  in  the  last  analysis  is  determined  very 


140 


MANAGEMENT   DECISIONS 


largely  by  his  ability  to  maintain  himself  highly  efficient  at  all 
times. 

Many  executives  have  essentially  the  right  combination  of 
qualities,  so  certain  is  the  survival  of  the  fit,  so  exacting  the  test 
an  executive  undergoes  in  establishing  and  maintaining  an  or- 
ganization. But  with  age  and  changing  conditions,  a  manager 


FIGURE  XXVI:  "Size  up  your  job"  is  an  instruction  which  the  manager  even  more  than  the  sub- 
ordinate needs  to  apply.     The  manager  is  the  one  man  in  the  concern  who  may  have  full  knowledge 
and  exercise  full  power.     This  analysis  is  designed  to  give  a  perspective  upon  the  duties  for  which 
the  manager  must,  therefore,  be  responsible 

sometimes  loses  his  balanced  point  of  view :  unimportant  details 
take  on  undue  gravity,  vital  matters  he  passes  over  lightly  or 
loses  sight  of.  At  length  he  commits  an  error  of  judgment  which 
weakens  his  self-confidence  or  which  more  often  is  apparent  to 
everyone  but  him.  Then  you  hear  it  said:  "The  chief  is  losing 
his  grip." 


SETTING   THE   PACE 141 

Back  of  this  loss  of  personal  efficiency  is  usually  some  mis- 
taken idea  which  the  executive  has  allowed  to  color  his  thinking 
— a  lack  of  progressiveness,  an  undue  fondness  for  some  side- 
line which  he  has  allowed  to  absorb  energies  that  rightly  belong 
to  the  main  show.  Or  more  likely,  perhaps,  the  executive  has 
stuck  too  close  to  his  business,  has  not  kept  himself  in  touch  with 
the  outside  influences  among  which  his  enterprise  functions, 
has  even  neglected  to  maintain  his  physical  condition  and  so  has 
"gone  stale." 

WHAT  THE  MANAGER  MEANS  TO  HIS  ORGANIZATION— AS  CHIEF  OF  STAFF 
HE  TRANSLATES  PLANS  INTO  ACTION 

'T1  HE  same  solicitude  with  which  an  army  protects  its  general, 
or  a  team  values  its  trainer,  the  manager  needs  to  give  his 
own  powers.  If  he  is  the  chief  administrator,  he  is  also  the  chief 
of  staff — the  one  officer  of  the  company  who  both  plans  and  exe- 
cutes. He  constantly  needs  the  fighting  courage  to  put  through 
hard  campaigns ;  and  also  as  chief  of  staff,  he  must  keep  intensely 
alive  his  creative  and  planning  powers.  As  it  is  said  of  success- 
ful artists,  he  must  always  be  his  own  keenest  critic.  His  organ- 
ization reflects  his  best  and  worst  qualities;  he  must  keep  him- 
self sensitive  to  its  revelations.  He  should  strive  continually 
for  fresh  and  clear  perceptions,  a  mind  well  informed  on  outside 
developments  and  a  body  in  perfect  trim  (Figure  XXVI). 

Rigid  adherence  to  the  factory  schedule  may  be  essential 
for  shop  hands,  the  clerical  force  and  all  those  who  give  so  many 
hours  daily  to  handling  work  which  has  been  adjusted  to  that 
schedule.  To  exact  time-service  from  purely  staff  officers,  how- 
ever, is  a  different  matter.  Freedom  of  thought  and  action,  not  a 
mechanical  routine ;  results,  not  hours,  count  in  the  work  of  plan- 
ning. One  of  the  most  successful  efficiency  men  and  managers 
in  this  country  tells  his  staff  men  never  to  appear  on  the  job 
unless  feeling  fit,  and  if  during  the  day  their  interest  flags,  to 
find  some  good  excuse  for  leaving  without  delay.  "Go  away 
somewhere,"  is  this  manager's  counsel;  "take  a  run  down  to 
the  seashore  or  go  for  a  long  tramp ;  do  something  that  will  rest 
and  refresh  you  mentally.  Come  back  when  you  feel  your  en- 
thusiasm again  on  tap." 


142 


MANAGEMENT  DECISIONS 


If  it  is  well  for  the  temporary  chief  of  staff  to  follow  this  rule, 
how  much  more  important  is  it  that  the  manager  himself,  the 
permanent  chief  who  must  last  indefinitely  on  the  job,  should 
do  so.  So  let  him  standardize  the  routine  as  far  as  common 
sense  permits,  but  let  him  keep  himself  free  from  subservience  to 


the 


I  am  a  member  of 
'Double-up  Club"  of  1915 


1.  Simple  food, 
quality, 
quantity. 

2.  Regularity 
in  eating 
and  sleep. 

3.  Masticate; 
do  not  hurry. 

4.  We  are  a 
part  of  all  we 
have  eaten. 

5.  Exercise,  five 
minutes,  three 
times  daily. 

6.  Air— most 
important. 

7.  Sunlight,  arti- 
ficial  light 

8.  Water  inside 
and  outside. 

9.  Loose 
clothing. 

10.  Early  to  sleep; 
get  plenty. 


i 


1.  Think  sanely. 

2.  Learn  from 
mental 


3.  Learn  to 

listen 

attentively. 

4.  Read  best 


5.  Improve  the 
memory. 

6.  Concentrate. 

7.  Don't  worry 
unnecessarily. 

8.  Be  systematic. 


10.  Avoid  inferior 


10.  Have  a 
Constitution. 


3.  Think  alone. 

4.  Learn  to  be 
happy  alone. 

5.  Family  best 
company. 

6.  Work  out, 
alone,  my 
problems. 

7.  A  void  so- 
called  Society. 

8.  Entertain 
economically, 

9.  Stand  well 

neighbors. 
10.  Do  some 
welfare  work. 


FIGURE  XXVII:  Personal  efficiency  is  expressed  persuasively  in  all  its  bearings  in  the  National 

Cash  Register  booklet  from  which  this  chart  is  reproduced.     The  manager  who  has  learned  how  to 

maintain  his  own  efficiency  is  almost  sure  to  extend  the  same  doctrines  to  his  force 

any  standard  save  personal  efficiency.  If  this  means  coming 
late  and  going  early,  if  it  means  an  afternoon  off  now  and  then 
for  golf,  yachting,  base  ball  or  motoring,  let  it  be  so.  If  it 
means  reaching  out  across  the  world  for  ideas  and  renewed 
enthusiasm — an  extended  trip  once  every  year  or  two,  attend- 
ance now  and  then  at  a  convention,  or  inspection  of  other  fac- 
tories and  offices,  his  own  business  should  be  so  arranged  that 
he  can  go  freely. 
If  he  cannot  get  away,  he  may  well  feel  that  the  proper  mechan- 


SETTING  THE  PACE 


143 


ism  of  direction  and  control  is  not  yet  his.  If  going  would 
leave  the  organization  without  some  one  authorized  and  qualified 
to  handle  any;  minor  emergency  that  might  come  up  in  his  ah- 


^x^T^^s^^ 

Air 

nequis 

-x^^*^\ 

Food 

IBS  lui  LUC  dim 

^^^\ 

Water 

neaiui 
Light  _ 

Rest  and  Exercise 

Clean  air  night  and 

Your  servant  not 

Inside  and  outside 

Sunlight 

REST 

day 

your  master 

daily 

Brings  sunshine  with- 

Mental and  physical 

Air,  once  breathed,  is 

Fuel  for  your  .engine 

Warm  baths  for  clean- 

in the  body 

unclean 

liness 

The  reward  of  work 

Buy  it  wisely 

Destroys  germs 

well  done 

Crowded  rooms  and 

Cold  showers  for 

theaters  spread  colds 

Cook  it  well 

•bracers- 

Dispels  the  "blues' 

Relax  the  mind  and 

body  daily 

Colds  are  catching 

Crush  it  fine 

Two  million  sweat 

Faded  carpets  better 

glands 

than  faded  cheeks 

The  resting  body 

Deep  breathing 

Enough  but  not  too 

repairs  quickly 

prolongs  life 

much 

1J  pints  eliminated  by 

Nature's  greatest 

the  skin  daily 

life-saver 

Prolonzs  life 

Sleep  outdoors  If 

Hunger-the  best 

possible 

spice 

Clean  skin  lessens 

Children  and  plants 

EXERCISE 

work  of  liver  and 

die  without  it 

One-third  of  life 

The  simpler  the 

kidneys 

For  health,  not  for 

spent  in  bed  -have 

better 

Light  and  disease  are 

strength 

windows  large 

Cool  baths  increase 

always  enemies 

Every  food  affects 

resistance  to  disease 

Sends  clean  blood 

Bedroom  windows 

the  whole  body 

"The  fountain  of 

to  brain 

wide  open  winter 

Teach  every  child  to 

energy" 

and  summer 

There  is  no  -brain 
food" 

swim 

Eliminates  poisons 

Nature's  best  tonic 

Necessary  for  good 

Beware  of  fads 

brain  work 

The  only  blood 

purifier 

Avoid  excess 

FIGURE  XXVIII:  Another  chart  from  one  of  the  booklets  issued  in  President  Patterson's  personal 
efficiency  campaign.  Opportunities  which  the  manager  has  to  know  the  value  of  and  means  to  per- 
•onal  efficiency  are  thus  extended  to  those  subordinates  who  have  less  access  to  professional  advice 

sence,  such  as  handling  unusual  orders  or  serious  complaints, 
then  the  executive  has  failed  to  observe  the  principles  of  under- 
studies and  standard  methods. 


144 MANAGEMENT   DECISIONS 

One  manager  in  fact  makes  it  a  point  to  leave  at  unexpected 
and  unannounced  times  "just  to  give  the  boys  a  chance,"  as  he 
puts  it  '  *  While  I  am  around, ' '  he  says,  "  it  is  almost  impossible, 
manage  as  I  may,  to  stop  them  from  deferring  to  my  judgment. 
My  presence  literally  impedes  their  growth.  When  I  am  away, 
they  are  thrown  on  their  own  resources,  and  that's  what  develops 
men.  I  purposely  go  without  notice  and  return  the  same  way. 
They  do  not  know  what  moment  my  responsibilities  may  be 
thrown  on  them  and  as  a  consequence,  they  keep  themselves  pre- 
pared. Because  I  may  return  at  any  time,  they  are  also  fairly 
certain  to  'make  hay'  in  my  absence.  It  may  seem  odd,  but  I 
always  feel  that  they  have  accomplished  more  in  my  absence  than 
when  I  am  around." 

When  such  a  manager  can  no  longer  hold  the  pace  he  has  set, 
he  finds  it  easy  to  withdraw  without  taking  the  main  prop  from 
under  his  business.  Some  of  the  ablest  executives  in  industry 
have  recently  retired  to  the  "chairmanship  of  the  board,"  prov- 
ing their  qualities  of  leadership  once  for  all  by  the  presence  of 
an  understudy  able  to  take  their  place  in  the  president's  chair. 
This  course  assures  the  business  of  the  chief's  remaining 
strength  without  hampering  it  with  his  weaknesses.  Relieved  of 
his  arduous  executive  duties  he  can  still  give  his  best  hours  and 
clearest  thought  to  the  organization  he  has  built  up.  Removed 
from  detail,  and  reinforced  against  errors  of  judgment  by  the 
advice  of  his  board,  he  is  more  than  ever  the  leader  as  to  plans 
for  the  future  and  critical  review  of  day-to-day  results. 

By  such  organization  plans  and  personal  methods,  the  man- 
ager uses  responsibility  under  the  principle  of  super-inspection 
to  inspire  his  men  toward  breaking  records  he  himself  may  have 
set.  And  in  the  freedom  thus  gained,  he  reaches  out  for  still 
greater  initiative  and  inspiration. 

In  this,  as  in  everything,  however,  the  manager  should  work 
with  a  clearly  defined  purpose.  To  keep  irregular  hours  merely 
for  pleasure — to  divide  his  own  duties  among  his  men  simply 
to  get  away  from  his  business — to  gain  the  reputation  of  being 
the  one  non-producer  in  the  plant — introduces  a  stumbling  block 
to  content  in  the  force.  The  manager  needs  to  prove  to  his  men 
that  he  makes  the  best  use  of  his  time,  regardless  of  where  he 


.Mm 


PURCHASING   List          |6EUVIS!F.5 


MJUVHHI 


A  construction  company,  after  each  contract  is  laid  out  in  general  terms  on  the  board  previously 

•hown  (Page  128),  subdivides  the  work  and  distributes  these  schedules  to  the  operating  departments. 

All  department  schedules  are  returned  to  the  executive  office  three  times   a   week    in   order   that 

the  management  may  check  upon  the  progress  of  the  work 


1* 


11 


•2?S- 

3*1 


1?» 


1 


_  SETTING  THE  PACE  _  147 

keeps  his  person.  Back  of  his  irregularity  should  be  a  fixed  pur- 
pose to  further  the  business  in  ways  no  one  else  can  cover  and 
to  contribute  personally  the  greatest  total  good  to  the  establish- 
ment. 

FREEDOM  FROM  DETAIL  ENABLES  THE  MANAGER  TO  MEET  HIS  MEN 
HIS  TRADE  AND  THE  PUBLIC 


freedom  of  action,  for  example,  will  enable  him  to  know 
his  men  better.  In  many  businesses  the  manager  is  ignorant 
of  the  feelings  and  conversations  that  go  on  among  the  em- 
ployees. What  they  are  thinking  about,  how  they  regard  the 
future  of  the  business,  where  they  see  possibilities  for  it  and  what 
rewards  will  bring  out  the  best  in  them  are  unknown  to  their 
chief,  just  as  his  breadth  and  sympathy  are  frequently  unknown 
to  them.  Some  managers  have  a  natural  knack  of  bridging  this 
gap.  They  drop  into  a  department  now  and  then,  set  a  new 
pace,  prove  a  personal  understanding  of  that  detail  of  the  work 
and  link  it  in  the  minds  of  the  men  with  the  great  purpose  of  the 
business.  In  this  contact  any  shrewd  manager  will  learn  to  see 
himself  as  his  organization  sees  him  and  will  feel  spurred  anew 
to  make  himself  the  real  leader. 

To  lead  he  must  inspire  confidence,  cause  men  to  respect  him 
and  desire  to  emulate  him.  He  must  first  of  all  be  a  Man  ;  calm 
and  self-possessed  ;  clean,  square,  self-confident  ;  sure  of  the  good 
in  all  men  but  quick  to  rebuke  trifling  with  principle  ;  hopeful 
and  resolute;  slow  to  pass  judgment  but  quick  and  decisive  in 
action  ;  as  considerate  of  the  rights  of  the  gate  keeper  as  of  the 
superintendent.  He  must  have,  too,  a  philosophy  of  his  busi- 
ness and  logical  habits  of  mind  to  meet  his  problems  —  the  ability 
to  disregard  precedent,  to  see  afresh  and  without  personal  bias, 
to  take  a  problem  to  pieces,  find  where  the  trouble  lies,  how  to 
correct  it  and  put  the  new  course  into  action  step  by  step. 

Such  a  leader,  men  follow  even  at  a  personal  sacrifice.  The 
influence  of  this  type  of  manager  permeates  the  business.  Good 
men  are  drawn  to  him  and  show  unsuspected  abilities  under  his 
handling.  His  payroll  is  an  asset  in  good  will. 

In  the  outside  contacts,  meanwhile,  he  must  keep  abreast  of 
the  times.  No  progressive  manager  any  longer  is  contented  with 


148 MANAGEMENT  DECISIONS 

his  own  experience  alone  as  a  guide.  Each  seeks  ideas  constantly 
from  other  managers.  The  chamber  of  commerce,  the  weekly 
luncheon  of  managers  in  his  own  line,  and  the  other  associations 
that  broaden  men,  are  now  his  to  enrich  his  own  mind  and  round 
out  his  control. 

In  this  way  he  will  balance  up  his  personal  peculiarities  and 
possess  himself  of  the  best  in  the  methods  of  other  managers. 
His  business  will  rarely  seem  an  irksome  task,  but  will  grow  into 
an  inspiring  and  absorbing  service,  handled  with  the  self-con- 
fidence that  comes  with  the  helmsman's  intuitive  sense  of  the 
right  move  of  the  tiller  to  meet  any  circumstance. 


X 

FITTING  THE  FACTORY 
TO  ITS  TRADE 


WHAT  are  you  going  to  do?"  the  general  manager  of  an 
Indiana  wood- working  factory  inquired  of  his  factory 
superintendent  early  in  August,  1914. 

"I  don't  know  yet.  We  still  have  some  work  ahead,  but  it 
looks  like  short  hours  at  once  and  a  shut-down  soon,"  said  the 
superintendent. 

"I  know  what  I  should  do  if  I  were  in  your  place,"  replied 
the  general  manager.  "I  should  be  out  with  the  salesmen  this 
afternoon." 

The  factory  superintendent  made  the  most  of  this  sugges- 
tion. He  went  with  one  of  the  best  salesmen,  watched  him  re- 
buffed in  most  of  the  offices  from  which  he  was  accustomed  to 
take  orders  and  soon  was  suggesting  to  him  new  types  of  pros- 
pect for  wood  products  and  assisting  him  to  shape  his  bids  to 
lines  of  work  which  the  factory  had  never  handled. 

Those  first  few  days,  when  competing  concerns  were  stunned 
by  the  news  of  war  in  Europe,  decided  the  future  of  this  plant. 
New  lines  of  wood-work  were  found,  to  handle  which  the  factory 
was  well  equipped;  lines,  moreover,  which  promised  larger 
markets  than  the  regular  product  could  ever  have  afforded.  By 
recognizing  his  factory  as  a  flexible  machine  and  adapting  it  to 
new  wants,  the  superintendent  solved  the  problem  of  profit 
and  loss. 

Demand  is  the  foundation  of  business — the  current  upon 
which  the  work  of  producing  and  distributing  goods  is  borne. 
No  manager  can  ever  afford  to  get  far  from  that  fact.  Demand 
can  be  aroused,  stimulated,  educated,  swerved  to  some  extent, 


150 MANAGEMENT   DECISIONS 

but  its  deepest  currents  are  full  of  changes  and  surprises  which 
cannot  be  controlled  and  to  which  the  factory  must  be  adjusted. 
Otherwise  the  final  objective  of  factory  management — perma- 
nent returns  on  the  investment — can  be  reached  only  by  chance. 

It  has  come  to  be  a  rule  of  averages  that  an  industry  knows 
three  phases — (1)  that  of  development,  in  which  the  capacity  of 
the  business  to  soak  up  capital,  to  a  conservative,  seems  un- 
limited; (2)  the  speculative  stage,  during  which  the  business 
gathers  headway  fast  and  pays  returns  for  the  lean  years  as 
well  as  the  present;  and  (3)  the  stage  where  increased  selling 
efforts  meet  with  diminishing,  or  relatively  less  returns.  De- 
spite instances  of  a  ''tidy  business"  built  up  by  the  father  and 
coming  down  to  the  son  and  the  son's  son  on  the  same  com- 
fortable basis,  this  sequence  is  the  rule.  Beneath  it,  moreover, 
lies  a  philosophy. 

A  business  is  based  on  an  idea.  The  founder  has  picked  out 
a  certain  demand  upon  the  part  of  the  public  and  gradually 
shaped  his  organization  to  supply  it.  Once  the  mechanism  of 
supply  is  perfected  and  in  line  with  the  demand,  returns  are 
favorable.  Then  success  brings  competitors.  Through  competi- 
tion prices  are  cut  to  a  narrow  margin  or  none.  The  product, 
which  in  the  beginning  was  perhaps  a  specialty,  patented  or 
otherwise,  or  a  "special,"  built  to  order  in  every  individual  case, 
has  become  standardized  and  staple.  The  everyday  demand, 
perhaps  increasing  parallel  to  the  increase  in  population,  monop- 
olizes the  attention  of  the  management.  No  new  ideas  are 
injected  into  the  enterprise.  Currents  shift,  competitors  with  a 
new  refinement  come  into  favor  and  the  business  often  "runs 
out." 

HOW  TRADE  GROWS  AWAY  FROM  PRODUCTS  WHICH  ONCE 
WERE  POPULAR 

CUCCESS  accordingly  depends  upon  keeping  the  business  in 
a  definite  forward  current  of  demand.  It  is  not  essential 
to  be  in  the  main  current  and  supply  the  great  mass  of  people 
with. a  necessity  of  life,  such  as  flour  or  sugar,  clothing,  fuel 
or  shelter.  A  side  current  may  prove  highly  profitable — a 
specialty  such  as  "Uneeda  Biscuit,"  "Crystal  Domino"  sugar, 


FITTING   SUPPLY  TO   DEMAND 


151 


How  Intensive  Manufacturing  Saved  One  Business  from  Failure 

Lines  Manufactured 

A           ||            B           ||            C           ||            0           ||            E 

Original  Line. 
Volume  about  25% 
of  Total  Business 

Largest  Volume 

Small  Volume 

Second  Largest 
Volume. 

Smallest  Volume 

Profit  and  Loss 

Paying  Small 
Profit  and  Sales 
Increasing;  but 
Margin  Failing 

Cut-Prlce 
Competltion- 
Every  Sale  Made 
at  a  Loss 

Quality  out  of 
Balance  with 
Price-  Selling 
at  a  Loss 

Supposed  to  Be 
Profitable,  but 
Cost  Figures 
Proved  Inaccurate 

Highly  Profitable, 
but  Field 
Closely  Limited 

Prospects  of  Success  or  Failure 

Sales  Equalled 
Only  £  of  Total 
Consumed 

Large  Competitor 
Held  Dominating 
Position 

Competitive  Lines 
More  Suitable  In 
Design  and  Grade 

Advance  In  Price 
Would  Increase 
Selling  Difficulties 

Other  Plants  Able 
to  Handle  This 
Line  More  Easily 
as  a  By-Product 

The  Decision 

Manufacturer 
Retrenched  Deeply, 
Concentrated  on 
This  Line  and 
Increased  Volume 
More  than  Four- 
fold with  Reduced 
Costs 

Sold  This  Line  to 
Big  Competitor 

Dropped  This  Line 
and  Closed  Out 
the  Equipment 

Sacrificed  Line  to 
Another  Factory 

Sold  Line  and 
Equipment  to  a 

Favorably  Placed 
Concern 

FIGURE  XXIX:  A  factory  which  was  facing  failure  was  making  five  main  lines — A,  B,  C,  D,  and  E— 

in  the  relative  volumes  roughly  indicated.     How  the  manager  examined  the  lines  from  the  viewpoint 

of  profit  and  loss,  determined  his  prospects  of  success  with  each,  and  brought  his  factory  into  step 

with  his  most  profitable  trade,  is  here  summarized 


152 MANAGEMENT  DECISIONS 

or  "After  Dinner  Mints,"  instead  of  the  staple  flour  or  sugar. 
Instead  of  manufacturing  such  a  staple  as  automobile-engine 
castings  or  bodies  for  various  assembling  concerns,  the  business 
may  be  catering  to  individual  tastes  in  a  narrow  field,  as  does 
the  maker  of  special  automobile  bodies  and  the  merchant  tailor. 
You  may  please  the  standardized  taste  of  the  masses,  the  special 
inclination  of  a  certain  class  or  the  highly  individual  tastes 
of  those  who  decline  to  be  standardized. 

Thoroughly  to  understand  your  own  and  the  adjacent  fields  of 
demand,  and  the  trend  in  each  will  usually  indicate  what  the 
business  and  the  factory  behind  it  should  do.  To  have  this  under- 
standing and  decide  on  this  policy  is  nothing  less  than  the  first 
requisite  of  management — the  one  all-important  job  for  the  head 
of  a  business. 

When  competition  in  the  staple  line  waxes  hot,  the  manager 
may  draw  upon  the  peculiar  advantages  of  his  organization, 
and  by  cutting  costs,  excelling  in  quality  and  service,  and  reduc- 
ing sales  expense,  may  practically  monopolize  a  certain  part  of 
the  field.  One  manager  who  was  putting  out  five  lines  found  on 
investigation  (Figure  XXIX)  that  only  one  was  paying  a  profit. 
By  abandoning  one  and  selling  out  three  to  competitors,  he 
cleared  for  action  on  the  profitable  line  and  on  it  alone  increased 
his  sales  total.  If  at  a  disadvantage  in  facilities,  however,  the 
manager  should  still  consider  that  the  organization  he  has  built 
up  is  far  more  flexible  than  he  probably  realizes.  Let  him 
swerve  it  into  a  special  line  where  by  tests  he  finds  a  fresh 
demand  and  to  which  most  of  his  investment  can  be  adapted. 

In  this  way  the  specialty  splits  off  from  the  staple ;  the  busi- 
ness in  by-products,  and  the  made-to-order  trade  further  sub- 
divide; the  latter  in  turn  grows  into  a  staple  and  has  its  off- 
shoots which  afford  success  to  the  concerns  following  them.  This 
division  applies  to  both  goods  and  service — both  to  the  factory 
which  processes  shoes  and  the  organization  which  makes  and 
markets  a  service — the  architect's  office,  the  laboratory,  the  repair 
shop.  Life  constantly  grows  more  complex,  and  demand  more 
intricate,  more  specialized  (Figure  XXX).  The  public  scale 
of  wants  is  always  increasing — its  sense  of  what  is  proper  always 
going  up.  The  progressive  manufacturer  keeps  always  readjust- 
ing as  a  policy,  maintaining  his  goods  in  line  with  his  markets 


FITTING   SUPPLY  TO   DEMAND 


153 


just  as  his  maintenance  men  in  the  plant  make  their  rounds  to 
true  up  the  line  shafting. 

How  frequently  this  readjustment  is  to  be  made  depends  on 
the  type  of  product.    Catering  to  individual  whims  may  be  the 


FIGURE  XXX:  Every  average  commodity  has  its  experimental  stage,  when  it  is  made  to  individual 
order;  then  its  sharp  curve  of  success,  its  slowing-down  stage,  when  competition  becomes  close  and 
processes  standard,  and,  finally,  its  defensive  stage,  when  improved  products  in  the  same  field  heavily 
attack  the  demand  that  supports  it.  The  importance  of  these  inevitable  stages  in  the  life  of  most 
products  demands  attention  for  them  from  the  production,  sales  and  advertising  heads  of  every 
concern.  A  rough  illustration  of  the  typical  development  among  cereal  products  is  here  given.  Flour 
(represented  by  A),  after  many  years  of  made-to-order  milling,  has  become  a  staple  product,  produced 
by  many  mills  in  close  competition  on  a  narrow  margin.  A  certain  natural  increase  in  demand  was 
to  be  expected.  Then  specialty  lines  (as  B-B,  packaged  and  branded  flour,  and  prepared  cereals) 
developed.  Because  of  their  unique  features,  these  specialties  escaped  the  closer  competition,  paid 
better,  and  not  only  created  a  demand  of  their  own,  but  invaded  the  field  of  the  staple.  As  a  trade 
was  educated  to  these  specialties,  quantity  production  permitted  processes  to  be  standardized  and 
invited  competition,  so  that  the  lines  tended  to  become  staple.  Special  made-to-prder  bread  and 
crackers  (C-C)  developed  from  these  specialty  ideas,  more  closely  fitting  the  individual  wants  of 
smaller  classes  of  consumers.  As  these  specials  became  popular,  however,  they  were  marketed  in 
competition  by  many  professional  bakers  and  became  staple.  Firms  which  wished  to  escape  this 
competition  then  standardized  and  trade-marked  their  goods  as  specialties  (D-D,  an  advertised 
brand  of  bread,  and  a  brand  of  packaged  soda  crackers).  Already  the  public  has  grown  accustomed 
to  these  specialties,  and  competition  has  given  them  such  distribution  that  they  are  accepted  as 
staples.  Other  specials,  meantime  (E-E,  fancy  breads,  crackers  and  confections),  have  developed  to 
suit  individual  tastes,  and  permit  the  artists  of  the  trade  to  exercise  and  profit  by  their  individuality. 
As  these  articles  were  taken  up  by  competition  and  became  staple  (rolls,  ginger  and  fig  wafers,  etc., 
in  bulk),  enterprising  manufacturers  developed  specialties  (F-F)  based  upon  them,  which  came  on 
the  market  as  boxed  and  branded  ginger  and  fig  wafers,  etc.  In  every  line  this  sort  of  subdivision 
and  multiplication  of  wants  is  constantly  to  be  expected  by  the  manufacturer.  Planning  to  keep  in 
line  with  his  trade  is,  therefore,  one  of  his  most  important  functions 


business  of  the  factory,  on  which  its  prices  are  based,  or  the 
manufacturing  of  a  special  may  be  inexcusable  under  a  strict 
scheme  of  standardization  such  as  that  at  the  Willys-Overland 
plant.  Between  these  two  extremes  are  all  the  gradations  of 
standard  manufacture.  The  important  thing  is  to  make  a  con- 


154  _  MANAGEMENT   DECISIONS  _ 

scious  policy  of  what  you  are  doing,  based  upon  an  up-to-date 
knowledge  of  your  field  and  your  plant.  Merely  to  standardize 
work  and  veto  all  changes  because  it  costs  money  to  alter  pat- 
terns, dies,  tools,  instruction  cards  and  selling  methods  is  not  a 
policy,  but  a  stiffening  of  the  factory's  joints.  It  indicates  old 
age  and  invites  competitors  to  supersede  you. 

SETTING  UP  GAGES  BY  WHICH  THIS  DRIFT  OF  TRADE 
CAN  BE  OBSERVED 


demand  shows  an  ominous  slackening  —  better  yet,  be- 
fore the  unfavorable  trend  of  your  trade  has  expressed 
itself  in  actual  figures  on  your  ledger,  the  manager  should  be 
studying  and  gaging  the  changes  in  the  trade  with  all  his  acumen. 
As  soon  as  he  detects  a  new  trend,  readjustments  are  in  order  — 
readjustments  in  product  or  selling  policies,  or  perhaps  both. 

To  read  these  perplexing  undercurrents  in  trade  and  to  re- 
align the  factory  and  selling  machinery  to  fit  them  calls  out  all 
the  management  qualities  a  business  can  command.  No  rules  can 
be  laid  down.  How  managers  have  dealt  resourcefully  with  such 
situations  can,  however,  be  studied. 

Fundamental  conditions  sometimes  tell  the  manager  what 
he  needs  to  know  about  the  drift  of  trade.  When  other  fac- 
tories were  busy  constructing  cars  priced  at  five,  six  and  seven 
thousand  dollars,  it  was  an  intuition  to  Henry  Ford  that  the  man 
of  modest  income  has  the  same  inclination  towards  outdoors,  speed 
and  convenience  as  people  of  greater  means,  and  that  by  evolving 
standard,  low-cost  production,  he  could  develop  a  monopoly  vein 
in  the  market  for  automobiles,  to  the  extent  of  a  truly  enormous 
demand. 

"Is  my  product  right?"  is  the  most  frequent  question  the 
manufacturer  asks  himself  during  his  first  six  months  in  business. 
At  the  start,  his  enterprise  is  indeed  merely  a  process  of  turning 
out  something  and  carrying  it  to  customers,  finding  out  what  they 
think  about  it  and  further  refining  it.  Within  certain  limits  the 
testing  and  refining  process  should  be  kept  up  throughout  the 
course  of  the  business.  In  many  concerns  this  is  actually  done. 

Recently  a  large  eastern  corset  company  has  established  three 
"test"  stares,  in  New  York,  Chicago  and  San  Francisco.  Skilled 


FITTING   SUPPLY  TO  DEMAND 155 

salesmen  at  these  stores  make  special  studies  of  both  new  and 
old  lines  in  their  dealings  with  customers.  Through  these  men, 
the  company  hopes  "to  be  able  to  ascertain  the  individual  re- 
quirements of  average  women  and  without  delay  to  make  the 
necessary  modifications  in  its  wholesale  lines."  The  management 
has  also  arranged  for  dealers  the  country  over  to  contribute  their 
trade  notes  to  the  investigation.  With  outposts  of  this  sort  at 
strategic  points,  the  factory  is  assured  of  being  among  the  first 
to  learn  of  changes  demanded  by  the  trade. 

Fashions  is  one  of  the  most  difficult  of  all  problems  of  trade 
adjustment.  "We  hardly  get  a  new  line  of  garments  into  the 
stock-room,"  said  one  cloak  maker,  "before  they  are  out  of 
date  and  must  be  unloaded  at  a  sacrifice."  In  the  days  of  long 
stocks  and  onee-a-season  purchasing  this  condition  did  not  exist. 
Dealers  educated  to  thin  stocks  and  frequent  re-orders,  however, 
have  brought  it  to  a  focus.  Garment  manufacturers,  working 
upon  this  problem  in  conjunction  with  leading  retailers,  have 
developed  a  method  of  gaging  demand  in  advance.  Test  models 
of  gowns  and  coats,  especially  ticketed  to  prevent  their  delivery, 
go  on  display  at  the  beginning  of  the  season  and  orders  are 
scored  for  the  various  models.  Quantity  production  is  sched- 
uled only  for  those  items  winning  a  heavy  vote.  Styles  that  are 
not  right,  moreover,  come  in  for  correction.  Supply  is  tailored 
by  repeated  fittings  upon  demand  under  average  conditions. 

In  a  similar  way,  new  tools,  new  food  products  and  many  other 
items  are  tested.  Average  towns  are  sometimes  chosen  in  which 
different  mixtures,  different  packages  and  different  selling 
schemes  are  tested.  But  the  principle  is  not  limited  to  new 
products  and  is  capable  of  great  expansion.  The  rule  is  that 
demand,  like  materials,  may  to  a  certain  extent  be  tested  in 
advance  of  each  re-investment  in  stock. 

Advertising  supplies  many  devices  for  thus  gaging  demand, 
by  circular  letter,  by  booklet,  by  the  use  of  space  in  various 
mediums.  For  similar  reasons,  some  concerns  frequently  call 
their  field  salesmen  into  conference  with  the  management.  The 
salesman,  as  the  man  who  explains  talking  points  to  prospects 
and  explains  away  the  prospect's  objections,  is  well  fitted  to 
speak  on  at  least  the  negative  side  of  demand.  He  may  not  know 


156 MANAGEMENT   DECISIONS 

towards  what  the  public  is  drifting,  but  he  is  almost  certain  to 
know  from  what  it  is  drifting  away,  and  perhaps  why. 

Complaint  data,  similarly,  can  be  so  organized  as  to  give  defi- 
nite indications  about  the  trend  of  demand.  The  complaints 
may  pertain  only  to  the  packing  of  the  product,  or  may  point 
to  defects  in  design,  construction  or  material.  An  analysis  of 
complaints  by  departments  and  under  such  headings  as 
"Price,"  ''Quality,"  "Service,"  and  "Other  Preference"  in- 
sures the  manager  that  he  is  not  unconsciously  drifting  away 
from  his  trade.  One  manager  handles  every  letter  of  complaint 
personally.  "What  we  have  done  right  I  can  forget  about,"  he 
says;  "but  complaints  involve  our  good  will  and  show  us  where 
we  are  falling  down.  They  point  to  the  future." 

HOW  RESOURCEFUL  MANAGERS  HAVE  REVISED  PRODUCTION 
IN  LINE  WITH  NEW  WANTS 

T717HATEVER  the  manager  reads  as  to  the  trend  of  his  trade 
must  be  accepted,  unflinchingly.  The  ensuing  readjust- 
ment to  suit  demand  must  be  no  less  so.  When  the  management 
of  a  bar  fixtures  factory  saw  state  after  state  shifting  into  the 
"dry"  column,  they  first  turned  the  genius  of  their  business  into 
the  channel  of  manufacturing  game  tables  for  home  use  and  by 
brilliant  selling  tactics  developed  this  broad,  stable  market ;  then 
announced  that  they  would  absolutely  discontinue  the  manufac- 
ture of  bar  fixtures.  Readjustment  of  production  in  this  case 
meant  discontinuance  of  an  important  staple  line.  But  the  prior 
development  of  another  even  broader  market  robbed  the  change 
of  its  peril. 

When  the  Macbeth  glass  works  found  the  oil  lamp  giving  way 
to  gas  and  electric  lights,  in  the  latter  of  which  the  "chimney" 
was  a  part  of  the  patented  manufacture,  it  realigned  its  produc- 
tion forces  to  grow  into  the  field  of  gas  and  electric  shades  and 
fixtures,  as  rapidly  as  the  new  conveniences  came  into  wider  use. 
Manufacturers  of  coal  stoves  found  in  the  same  new  forces  a 
drift  of  demand  which  has  kept  them  re-shaping  their  product 
season  after  season.  Gas  and  electric  stoves  for  both  cooking 
and  heating  now  form  a  large  volume  of  the  trade.  Gas-and-coal 
stoves  also  have  found  a  market,  in  according  heat  in  cold  weather 


FITTING   SUPPLY   TO   DEMAND 


157 


and  quick,  cool  convenience  in  summer.  As  coal  was  done  away 
with,  the  chance  for  a  white  stove  appeared,  and  the  factory  be- 
came almost  as  much  of  an  enameling  plant  as  a  foundry  and 
machine  shop. 

How  plants  have  shifted  from  bicycle  making  to  the  manu- 
facture of  automobiles  and  from  both  wagons  and  automobiles  to 
motor  trucks  indicates  resourcefulness  under  similar  develop- 
ments in  demand.  War-time  changes  for  the  manufacture  of 
military  textiles,  ammunition  and  the  accessories  to  its  manu- 


• 

Fitting  the  Factory  to  the  Trade 

Manufacture  Only 
One  Item  and  Fully 
Standardize  It 

Specialize  on 
Several  Grades 
to  Fit  Different 
Groups  of  Buyers 

Standardize  Alt 
Elements,  but 
Specially  Assemble 
Each  Item 

Standardize  All 
Possible  Clements 

and  Aiapt 
Individually 
by  Specicl  Parts 

Make  Each  Item  to 
Individual  Order 

~_T 

1 

Keep  the  Product 
Adjusted  to  Changes 
In  Demand 

Utilize  All  By-Products 

Build  Up  Volume  by 
Intensive  Work  and 
Expansion  Outward 

1 

Volume  Reduces  Ratio  of  Cost  to  duality  and  Service 
Afforded,  and  Further  Broadens  Market 

FIGURE  XXXI:    To  standardize  the  product  is  one  of  the  great  tendencies  in  industry.  Even  if 
this  is  not  best,  the  manager  should  have  clearly  in  mind  just  what  service  his  factory  is  giving.     The 
five  main  manufacturing  propositions  are  here  indicated,  together  with  three  rules  that  apply  to  all, 
and  the  one  main  principle  which  underlies  success 

facture  instance  the  same  principle.  One  plant  recently  found 
a  paying  side-line  in  the  manufacture  of  small  tools  special  in 
details,  but  in  the  rough  capable  of  being  standardized  and  car- 
ried in  stock. 

The  transition  of  the  Gray-Davis  plant  from  the  manufacture 
chiefly  of  marine  engines  to  the  business  of  making  starters  for 
automobiles  shows  still  again  that  an  organization  is  flexible  and 


158 MANAGEMENT   DECISIONS 

that  for  the  demand  which  is  becoming  relatively  unimportant  a 
new  and  greater  demand  can  usually  be  found  if  the  manage- 
ment is  sufficiently  sensitive  to  men's  needs. 

While  the  great  trend  of  the  times  is  toward  standard  manu- 
facture of  a  single  product  or  part,  sometimes  a  concern  goes 
back  because  it  is  selling  only  part  of  its  product.  Almost  every 
industry  can  do  in  a  smaller  way  what  the  packing  industry  has 
done  in  the  marketing  of  by-products.  The  same  materials  that 
poison  the  air  in  the  Appalachian  coke  districts  make  up  products 
for  which  a  steady  demand  turns  to  the  Cement-Solvay  Company 
and  other  progressive  coke  and  gas  manufactories  (Figure 
XXXI). 

If  profits  are  not  right,  therefore,  your  study  of  demand  needs 
to  be  carried  on  in  conjunction  with  a  scrutiny  of  whatever  your 
factory  wastes.  Find  the  connection  between  the  scrap  pile  and 
demand.  Look  through  the  consumer's  eyes  at  the  resources — 
power,  raw  materials,  labor,  capacity — which  you  are  not  using 
in  full.  Find  what  product  they  would  make,  for  which  a  mar- 
ket can  be  found. 

Whether  it  is  a  whim  of  the  public  or  a  persisting  vein  of  de- 
mand which  you  are  working  is  an  alternative  the  manager  cannot 
afford  to  forget.  It  is  a  healthy  instinct  that  leads  the  manage- 
ment to  instruct  its  sales  manager,  and  the  sales  manager  to  in- 
struct his  men,  to  argue  against  "specials."  Often  it  is  only 
education  on  the  standard  goods  that  the  buyer  needs.  The  man- 
ager with  the  proper  perspective  upon  both  production  and 
sales  will  to  a  certain  extent  penalize  orders  for  non-standard 
goods,  or,  in  other  words,  pay  a  higher  commission  on  regular 
orders.  There  is  a  point,  however,  beyond  which  it  is  not  well 
to  push  this  plan.  The  salesman's  resistance  will  soon  develop 
the  real  strength  of  the  demand.  If  the  demand  is  there,  profit 
lies  in  line  with  it.  As  each  specialty  is  worked  out,  the  price  is 
set  to  profit  by  the  extra  value  which  the  variation  gives  the 
product  in  the  eyes  of  the  buyer — the  "consumer  surplus"  which 
a  certain  class  of  trade  is  ready  to  pay  for  something  more  exactly 
fitted  to  its  needs. 

Machine  tool  building  illustrates  this  point.  As  manufactur- 
ing has  become  more  specialized  and  standardized  on  a  quantity 
basis,  a  strong  current  has  set  in  against  stock  machine  tools. 


FITTING  SUPPLY  TO  DEMAND 150 

The  investment  in  a  special  machine,  so  equipment  experts  have 
proved,  is  usually  trivial  compared  with  the  producing  value  of 
a  machine  exactly  fitted  to  the  needs  of  any  concern  employed 
on  steady  output  of  standard  character.  The  maker  who  is 
persistent  in  his  policy  to  produce  only  standard  models  finds 
his  market  narrowing. 

In  the  face  of  this  problem  of  trade,  one  progressive  builder 
has  made  a  compromise  in  his  production  methods  which  retains 
much  of  the  efficiency  of  stock  production,  yet  gives  almost  per- 
fect adaptation  to  peculiar  needs.  He  builds  his  machine  stand- 
ard up  to  a  certain  point.  This  gives  him  a  good  manufacturing 
proposition  for  almost  the  entire  plant.  The  variations  he  isolates 
in  one  department.  His  machines  are  assembled  and  stored  in 
units  so  that  deliveries  can  be  made  quickly.  By  this  method  he 
largely  secures  the  advantages  of  standard  production,  yet  keeps 
in  line  with  special  requirements  in  that  part  of  the  machine 
tool  field  where  future  dividends  lie. 

DEALING  WITH  THE  INTRICATE  AND  PUZZLING  PROBLEMS 
OF  DEMAND  CREATION  AND  SUPPLY 

~T~\  EMAND — the  wants  of  the  public — is  by  no  means  a  simple 
problem  or  one  easily  understood.  What  the  public  wants 
at  one  time,  at  another  it  has  no  use  for;  the  manufacturer's 
judgment  is  taxed  to  the  utmost  to  know  just  when  to  announce 
a  new  line.  Some  products  meet  full-grown  wants ;  others,  wants 
not  yet  developed ;  still  others,  genuine  wants  which  yet  the  cus- 
tomer will  deny.  Sometimes  the  factory  goes  on  half  time  be- 
cause the  machinery  of  selling  is  clumsy  and  forces  the  customer 
to  use  up  too  much  energy  in  the  mere  act  of  buying.  At  other 
times  the  advertising  campaign  must  educate  the  trade  for 
months  or  years  before  they  recognize  that  the  product  is  de- 
sirable to  the  extent  of  a  permanent  demand. 

These  are  questions  of  selling  policy  with  which  the  manager 
as  well  as  the  sales  manager  should  be  familiar.  As  a  produc- 
tion problem,  however,  they  concern  him  only  so  far:  that 
changes  in  the  product  must  not  be  made  when  changes  or  greater 
persistency  in  selling  methods  are  the  true  need  of  the  business. 

Where  a  campaign  of  education  is  required,  "catching  the 


160 MANAGEMENT  DECISIONS 

prospect  young"  is  a  method  full  of  promise  for  the  future  of  a 
business.  The  breakfast-food  manufacturer,  the  makers  of  cloth- 
ing, soaps,  toilet  accessories  and  tobacco  products  follow  this 
method  in  overcoming  the  set  habits  of  older  people.  Children 
trained  to  the  new  product  will  often  bring  older  people  into 
line  and,  further,  may  be  counted  upon  as  steady  customers  in 
later  life. 

Spreading  the  burden  of  such  an  educational  campaign  over 
the  entire  industry  by  means  of  a  trade  association  has  been  done 
successfully  in  a  few  instances.  Educational  advertising  involves 
large  outlay  and  gives  returns  which  it  is  almost  impossible  for 
one  concern  to  concentrate.  In  one  industry  where  trade  condi- 
tions were  demoralized  and  the  manufacturers  were  at  the  mercy 
of  buyers  as  regards  prices,  special  work  and  free  engineering 
service,  an  association  has  been  formed  which  is  so  re-adjusting 
matters  that  the  public  can  profitably  be  educated  to  the  use  of  a 
highly  desirable  product  and  the  product  can  be  furnished  in 
increasing  quantities  at  a  reasonable  profit. 

KINKS  IN  THE  LINE  OF  DISTRIBUTION  THAT  HAVE  FORCED  FACTORIES 
TO  SHUT  DOWN  OR  REORGANIZE 

COMETIMES  the  problem  of  bringing  the  factory  and  the 
trade  into  accord  is  perplexing,  the  evidence  elusive.  All 
that  can  be  said  offhand  is  that  the  business  seems  not  to  gain. 
Thousands  of  dollars  may  wisely  be  spent  in  diagnosis  work 
before  the  factory  and  the  office  departments  can  again  work  in 
well  adjusted  harmony  with  the  trade.  In  such  cases,  business 
men  with  the  new  viewpoint  take  nothing  for  granted.  They 
approach  the  problem  as  if  it  were  entirely  new,  and  challenge 
axioms  of  the  trade  upon  which  business  has  been  done  suc- 
cessfully for  half  a  century.  They  analyze  the  problem  into  its 
elements,  assemble  the  facts  of  each  one,  eliminate  by  graphs, 
charts  and  plan  boards  the  details  that  cloud  the  judgment  and 
thus  approach  a  decision  on  which  a  successful  future  can  be 
based. 

Looking  behind  results  for  the  hidden  causes,  they  often  learn 
that  unsatisfactory  sales  are  due,  not  to  short  crops  or  industrial 
slackness,  but  to  fundamental  changes  in  marketing  conditions 


FITTING   SUPPLY  TO  DEMAND 


161 


or  consumer  demand  which  have  been  growing  up  over  a  score 
of  years.  Old  channels  of  distribution,  they  discover,  have  been 
broken  down  in  many  lines.  The  jobbing  house  has  been  elimi- 
nated as  a  factor  in  many  territories,  while  in  other  fields,  for 
other  products,  the  wholesale  units  have  been  multiplied  and 


Finding  the  Grade  of  Product  That  Pays  Best 


FIGURE  XXXII:  How  many  grades  of  product  to  make  and  at  what  prices,  in  order  to  strike  the 
richest  veins  of  demand,  is  a  manufacturing  problem  of  importance.  In  this  sketch  the  curved  line 
suggests  how  prospects  become  more  numerous  for  a  less  expensive  commodity.  The  decision  indicated 
is  to  market  two  grades,  "A"  at  $75,  and  "B"  at  $25.  If  a  competing  article  is  priced  at  $50,  these  two 
grades  would  perhaps  have  a  chance  of  drawing  trade  as  indicated  by  the  shaded  portions,  including 
buyers  who  prefer  higher  priced  articles  of  higher  grade,  and  others  who  prefer  more  economical 
purchases.  Even  if  the  value  suits  the  price  in  both  cases,  the  further  the  prospect  must  be  argued 
out  of  his  original  desire,  the  greater  the  selling  effort  necessary 

their  individual  size  reduced.  The  consumer's  demand  for 
national  trade-marked  package  goods  may  have  replaced  the 
wholesaler's  demand  for  bulk  goods  which  he  could  market  under 
his  own  name.  The  demand  from  a  certain  class  for  a  product 
at  a  certain  price  may  be  so  far  satisfied  that  the  business  is  on 
a  renewal  basis  only  and  another  grade  of  the  same  article  at  a 
lower  price  may  be  necessary  in  order  to  broaden  out  the  demand 
into  an  assured  future  (Figure  XXXII) .  Or  the  demand,  it  may 
be  found,  has  almost  vanished  in  a  field  which  was  formerly  rich. 


162 MANAGEMENT  DECISIONS 

After  gathering  and  classifying  his  facts,  the  manager  fre- 
quently discovers  that  to  maintain  his  accustomed  volume  or  ex- 
pand sufficiently  to  insure  healthy  conditions  in  the  organiza- 
tion, he  must  transfer  his  attention  to  other  groups  or  classes  of 
consumers,  develop  new  uses  for  his  erstwhile  staple  goods  or 
even  change  over  to  the  manufacture,  perhaps,  of  allied  lines. 
Occasionally,  searching  inquiry  uncovers  a  general  loss  of  con- 
fidence due  to  lowered  ideals  or  negligence  in  the  handling  of 
orders,  wholly  unknown  to  the  head  of  a  business. 

At  times,  the  slump  in  trade  is  a  natural  reaction  of  the  public 
against  being  pampered.  The  concern  which  takes  value  without 
truly  benefiting  its  customers  is  either  fooling  itself  or  its 
trade.  And  in  either  case,  the  reaction  can  be  looked  for.  If,  on 
the  other  hand,  the  manager  believes  in  the  best  in  human 
nature,  and  founds  his  enterprise  on  true  wants,  to  "come  back" 
after  a  slump  is  likely  to  be  only  a  matter  of  correcting  his  detail 
methods. 

HOW  A  PIONEER  BUSINESS  CHALLENGED  FAILING  TRADE  AND  SECURED 
A  TRUE  IMPRESS  OF  DEMAND 

I_J  OW  conditions  may  be  analyzed  and  the  facts  thus  sifted  may 
be  utilized  is  illustrated  by  the  recent  experience  of  one  great 
industry  which  had  developed  a  blind  side  in  its  outlook  on  de- 
mand. The  momentum  gathered  in  half  a  century  carried  it 
on  at  a  moderate  rate.  With  general  slackness  in  the  whole 
industry,  the  company,  it  was  agreed,  was  "holding  its  own." 

The  president,  however,  had  noticed  various  indications  which 
he  felt  to  be  more  than  symptoms  of  a  temporary  stagnation. 
Sluggishness  had  given  way  to  a  decided  downward  movement 
in  the  sales  by  territories.  The  whole  trade  seemed  sick. 

Called  into  council  by  the  president,  the  directors  made  light 
of  the  situation.  At  each  succeeding  meeting,  however,  as  they 
faced  the  accumulating  evidence  of  lost  ground,  they  began  to 
share  his  doubts.  They  were  unable  to  lay  finger  on  the  reasons 
for  the  recession  and  their  confidence  in  their  own  judgment 
weakened.  They  felt  the  adverse  undercurrent,  but  lacked  defi- 
nite information  either  to  reassure  them  or  to  confirm  their  fears. 

Finally,  the  president  brought  matters  to  a  focus. 


How  a  product  must  be  refined  to  fit  its  trade  is  typified  in  the  electric  lamp.      The   bulb  with  the 
wooden  base  is  a  replica  of  Edison's  first  successful  lamp.      Following  it  are  an  early   type  of  car- 
bon filament,  a  carbonized  silk  filament,  bamboo  filament,  standard  carbon,  tantalum  filament,  and, 
below,  two  tungsten  filaments,  and  an  improved  gas-filled  lamp 


Fitting  product  to  demand  is  further  illustrated  by  these  I.  H.  C.  tractors.     One  of  the  first  types 

(1908),  was  the  15-horsepower  friction  drive,  (left,  top).      The  next  developments   were  the  20- 

horsepower  gear  drive,  the  45-horsepower  in  1912,  enlarged  (left,  bottom)  to  60  horsepower  in  1914, 

the  SO-horse-power  (1914),  the  enclosed  25-horsepower,  and  the  "8-16"  (1915) 


^_ PITTING  SUPPLY  TO  DEMAND 165 

"It's  time,"  he  said,  "to  stop  this  traveling  around  in  circles. 
We've  got  to  quit  guessing  and  go  after  the  facts.  We  need  a 
thorough  investigation  into  all  the  conditions  surrounding  our 
business  and  the  tendencies  which  seem  to  be  turning  the  trade 
upside  down.'* 

One  of  the  directors  objected.  Hadn't  the  auditor  smothered 
them  with  figures  showing  forty  different  conditions  which,  in 
the  end,  turned  out  to  be  negligible  so  far  as  their  influence  on 
sales  went  ? 

"Yes,"  the  president  agreed,  "and  that  is  why  we  are  think- 
ing in  circles.  We  have  lived  too  close  to  this  business,  and  fed 
ourselves  too  much  on  mere  office  statistics.  We  need  perspective. 
We  need  to  see  this  business  in  relation  to  other  lines  of  trade 
and  general  consumer  conditions.  We  have  been  explaining  the 
fluctuations  of  our  trade  by  all  kinds  of  rough-and-ready  reasons 
— the  effect  of  consolidations,  tariff  tinkering,  the  political  situa- 
tion and  so  on.  But  we  haven't  one  shred  of  scientific  fact  to 
back  up  our  explanations. 

"We  have  got  to  dig  into  this  thing  hard  and  deep.  There 
are  several  vital  things  we  do  not  know  about  this  business.  We 
know  who  our  jobbers  are  and  the  names  of  our  larger  dealers. 
We  write  to  many  of  them  every  day  and  our  salesmen  visit  them 
regularly.  But  we  don't  know  who  buys  our  products  for  use 
or  with  what  kind  of  men  and  women  they  must  make  good. 

"Years  ago  we  put  our  trade  in  the  hands  of  the  jobbers. 
Retailing  has  changed  but  we  don't  know  how  it  has  changed 
or  how  the  changes  have  affected  our  products.  Consumer  de- 
mand has  changed :  we  need  to  know  why  and  how.  I  propose, 
therefore,  that  we  make  a  broad,  thorough,  analytical  investiga- 
tion into  all  these  things  and  try  to  reduce  the  information  to 
figures,  charts  and  reports  which  we  all  can  understand.  Then 
we'll  be  in  some  sort  of  shape  to  save  the  business." 

The  work  began  next  day.  First  a  conference  of  all  the  manu- 
facturing executives  was  called.  In  company  with  the  presi- 
dent, they  sized  up  the  production  situation  from  every  angle. 
They  examined  the  goods  from  the  viewpoints  of  salability,  value, 
efficiency,  safety  in  use.  But  a  searching  analysis  of  trade 
reports,  salesmen's  complaints,  the  results  of  technical  investiga- 
tion and  comparative  tests  established  nothing  except  that  the 


166 


MANAGEMENT  DECISIONS 


16 
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1890         1895 

1900 

1905    1910 

CAPITALIZATION 

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BUSINESS                        _ 
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(HUNDREDS)  —  ===== 

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FIGURE  XXXIII:    The  close  relation  maintained  between  the  total  capitalization  and  the  volume  of 
output  in  the  entire  industry  is  demonstrated  by  this  "graph."    As  explained  in  the  text,  it  covers 
the  operations  of  the  six  leading  manufacturers  only.    By  comparison  with  a  twin  chart  of  the  com- 
pany's business,  the  relatively  greater  prosperity  of  the  latter  was  made  clear 

goods  were  sound.  Then  followed  a  series  of  conferences  on  the 
quality  and  efficiency  of  the  products  as  compared  with  com- 
peting lines.  Every  consumer's  complaint  received  in  ten  years 
was  gone  over  in  detail.  But  no  flaw  in  the  sales  value  of  the 
goods  developed.  Wherever  the  sick  nerve  was,  it  could  not  be 
found  in  the  production  methods  or  the  work  of  the  factory. 
Interest  centered  next  on  the  sales  organization  and  the  funda- 
mental selling  situation.  A  study  of  the  whole  industry  was  first 


PITTING   SUPPLY  TO   DEMAND 


167 


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FIGURE  XXXTV:  Forty  years  of  facts  in  an  important  industry  are  here  reduced  to  a  graphic  record 
which  helped  to  show  the  factory  how  it  had  grown  away  from  its  trade.  The  fluctuating  rates  of 
increase  in  the  number  of  manufacturers,  jobbers  and  dealers  is  compared  with  the  relatively  steady 
rate  of  increase  in  population.  The  striking  fact  brought  out  by  the  chart  is  the  great  relative  increase 
in  the  number  of  wholesale  houses 

made.  Graphic  charts  presented  the  volume  of  business  of  the 
six  leading  companies.  They  pointed  back  forty  years.  Getting 
the  sales  figures  of  two  of  these  companies  was  easy ;  the  other 
three  guarded  their  statistics  jealously,  but  sufficient  data  were 
secured  to  make  the  final  estimate  one  very  close  to  the  actual 
figures.  This  sales  chart  showed  conclusively  that  there  had 
been  no  decrease  in  output  which  other  firms  had  not  felt  more 
keenly;  while  the  ratio  of  increase  was  always  greater  for  the 
home  company  than  for  the  other  concerns.  In  a  word,  not  one 
firm,  but  the  whole  industry,  was  suffering  the  same  sickness, 
whatever  that  might  be. 


108 MANAGEMENT  DECISIONS 

For  the  moment,  therefore,  the  investigation  did  not  take  up 
the  individual  efficiency  of  the  sales  staff  and  organization.  In- 
stead, it  followed  the  lead  pointed  by  the  sales  chart  for  the 
whole  industry,  and  tackled  the  broader  questions  of  the  con- 
sumer's attitude  towards  the  line,  his  need  of  such  products  and 
the  general  distributive  situation.  The  fundamental  problem  of 
business — to  secure  a  matrix  of  demand  into  which  the  supply 
might  be  fitted — was  before  them. 

Here  a  careful  investigation  was  necessary.  The  informa- 
tion likely  to  be  found  useful  and  suggestive  was  classified 
and  the  inquiry  was  pushed  in  all  parts  of  the  country.  Six 
weeks  later  this  information,  tabulated  and  reduced  to  graphic 
charts,  was  laid  before  the  executive  board.  It  supplied  clear 
and  unmistakable  reasons  for  the  condition  which  they  had  felt 
but  had  failed  to  analyze,  and  offered  data  comparing  the  cur- 
rent trend  of  the  industry  with  the  movement  in  other  lines. 

In  a  nut-shell,  the  peculiar  situation  in  the  trade  hinged  on 
three  separate  developments:  The  first  and  by  far  the  most 
important  was  the  movement  of  population  to  the  cities  and  the 
decrease  of  wild  and  uncultivated  land.  When  a  man  moved 
in  from  the  country  to  take  a  job  in  a  store  or  factory,  his  use 
of  the  company's  products  virtually  ceased. 

The  second  development  was  the  passing  of  control  of  dis- 
tribution from  the  hands  of  the  jobbers  in  the  central  markets 
and  the  multiplication  of  smaller  wholesale  houses  to  which 
the  carrying  and  pushing  of  the  company's  line  might  be  a  mat- 
ter of  only  casual  interest.  If  the  goods  were  called  for,  they 
would  be  supplied;  but  specific  demand  by  consumers  was  the 
only  reason  for  stocking  and  handling  them  which  these  new 
houses  recognized  as  imperative. 

The  third  transformation  which  had  taken  place  was  the  entry 
of  the  department  store  and  the  mail  order  house  into  a  field 
which  had  previously  been  controlled  exclusively  by  dominant 
specialty  dealers  in  every  town  of  any  size  throughout  the 
country. 

To  arrive  at  these  conclusions  thirty  or  forty  graphic  charts 
(Figures  XXXIII  to  XXXIV)  were  compiled,  covering  among 
others  the  following  facts  and  relations,  shown  by  decades  since 
1870. 


FITTING   SUPPLY  TO   DEMAND 169 

Number  of  distributors  compared  with  number  of  manu- 
facturers. 

Number  of  retail  outlets  compared  with  each  of  three  grades 
of  jobbers  and  wholesalers. 

Number  of  manufacturing  workers  compared  with  general 
total  of  distributors. 

Rate  of  increase  of  volume  of  trade  compared  with  increase  in 
distributors. 

Fluctuations  of  retail  and  wholesale  profits. 

Graphic  tabulation  of  the  length  of  time  present  jobbing  firms 
have  existed. 

Volume  of  trade  contrasted  with  general  bank  clearings,  build- 
ing activity,  and  per  capita  wealth. 

Number  of  retail  outlets;  also  number  of  jobbers  to  each  thou- 
sand of  population. 

Amount  of  purchase  by  individual  consumers. 

Ratio  of  population  movement  toward  cities  compared  with 
volume  of  trade  ratio  by  localities. 

Efficiency  of  salesmen  as  shown  by  calls. 

Ratio  of  increase  in  distributors  contrasted  with  the  increases 
in  other  lines  of  trade. 

Per  capita  consumption  of  the  line  of  goods  compared  with 
the  other  lines  of  goods. 

Capitalization  in  manufacturing  compared  with  volume  of 
trade,  and  ratio  of  increase  in  distributors. 

The  per  capita  consumption  of  the  whole  industry's  products 
was  a  long  and  tedious  job.  In  some  territories  the  books  of  the 
leading  wholesalers  supplied  the  necessary  information,  eked  out 
by  estimates  covering  the  volume  of  those  jobbers  who  were  not 
in  sympathy  with  the  purposes  of  the  inquiry.  In  many  cases  it 
was  necessary  to  draft  local  correspondents,  banks  and  com- 
mercial agencies  into  the  investigation. 

WHAT  THE  INVESTIGATION  SHOWED  AND  HOW  THE  BUSINESS 
AGAIN  PUT  ITSELF  IN  LINE  WITH  DEMAND 

T  T  was  not  easy,  frpm  this  somewhat  formidable  mass  of  matter 

to  arrive  at  conclusions  which  would  give  a  real  insight  into 

conditions.    The  figures  on  which  the  graphic  charts  were  based 


170 MANAGEMENT  DECISIONS 

would  have  discouraged  and  possibly  baffled  the  executives, 
whereas  the  graphic  charts  brought  all  the  information  into 
coherent  and  recognizable  relation.  One  by  one  the  conclusions 
projected  themselves  out  of  the  information  gathered  and  satis- 
fied even  the  most  skeptical.  Instead  of  guessing  that  the  in- 
creasing tendency  of  the  population  was  toward  the  city,  and 
that  the  gradual  elimination  of  forests  and  other  uninhabited 
places  was  one  big  factor  in  reducing  the  consumption  of  the 
company's  goods,  the  graphic  charts  not  only  corroborated  this 
theory  completely,  but  measured  the  exact  relation  between  cause 
and  effect. 

On  the  main  issues  all  agreed  that  the  evidence  of  the  charts 
was  conclusive.  The  falling  off  in  sales  for  the  whole  industry 
was  due  to  the  changed  attitude  of  the  consumer,  coupled  with 
the  general  indifference  of  the  wholesaler  and  the  lack  of  an  in- 
centive to  cooperation  on  the  part  of  the  dealer. 

This  conclusion  indicated  as  plainly  as  a  " graph"  itself  what 
would  have  to  be  done  to  restore  sales  vigor  and  efficiency.  Con- 
structive educational  work  was  necessary  to  revive  the  interest  of 
the  urban  consumer.  His  changed  situation  had  to  be  taken  into 
consideration  in  framing  the  new  appeal.  New  uses  had  to  be 
discovered  and  pointed  out.  Many  of  the  products  would  need 
to  be  designed  anew  and  adapted  to  this  changed  physical 
situation. 

Consumer  wants,  desires  and  opportunities  to  use  the  com- 
pany's goods  furnished  the  key  to  the  situation.  The  whole- 
saler's indifference  would  yield  to  the  revival  of  consumer  de- 
mand and  the  right  kind  of  selling  effort.  Where  he  failed  to 
show  the  proper  interest  in  the  new  sales  plans,  the  company 
had  a  second  string  to  its  bow.  It  could  either  transfer  the  ac- 
count to  another  jobber  more  amenable  to  influence  or  deal  with 
its  retailers  direct. 

The  advertising  manager,  in  touch  for  the  first  time  with  the 
environment  and  needs  of  consumers,  was  able  to  plan  a  cam- 
paign which  would  turn  the  attention  of  these  forgetful  buyers 
again  to  the  company's  products.  Knowing  where  the  various 
classes  were  grouped,  he  was  able  to  choose  mediums  and  vary 
appeals  so  that  each  dollar  spent  earned  its  right  proportion  of 
inquiries  and  orders.  His  campaign  directed  at  retail  dealers  had 


FITTING  SUPPLY  TO  DEMAND 171 

the  same  virtue  of  shooting  at  a  mark  made  visible  by  the  light 
of  exact  knowledge.  The  sales  manager,  in  Iris  turn,  found  the 
board  of  directors  a  unit  in  backing  the  vigorous  program  he 
laid  out  for  handling  the  jobbers  and  coaxing  his  dealers  into 
line  with  the  new  program  of  cooperation.  The  works'  super- 
intendent, who  had  been  urging  an  addition  for  two  years,  after 
studying  the  ''graphs,"  acquiesced  in  the  board's  decision  that 
for  three  years  every  surplus  dollar  was  worth  double  its  factory 
value  if  expended  in  the  selling  field.  Meantime  the  work  of  the 
factory  was  in  a  measure  revolutionized.  Old  models  were  dis- 
carded; new  models  designed  and  scheduled;  tests  made  of  pat- 
tern articles,  and  quantities  put  through  in  accordance  with  the 
results.  The  factory  which  had  been  making  what  its  trade  could 
use  only  at  a  disadvantage  veered  around  and  under  positive  in- 
formation took  the  center  of  the  stream  of  demand,  where  re- 
sistance is  at  a  minimum. 

This  particular  business  has  not  yet  solved  all  of  its  problems. 
It  has,  however,  made  a  fresh  start  on  a  well-mapped  road,  with 
an  organization  full  of  confidence  in  its  policies  and  its  managers. 
It  is  meeting  its  trade  problems  and  tendencies  intelligently  and 
is  gathering  strength  and  experience  in  the  new  program  and 
methods,  while  its  rival  companies,  without  definite  knowledge  on 
which  to  base  their  efforts,  are  piling  blind  enthusiasm  into  a 
widening  breach. 


XI 

EMERGENCIES-THE  CRUCIAL 
TEST 


ISN'T  it  true?"  one  of  the  machinists  at  the  Link-Belt 
works  inquired  point-blank  of  President  Piez,  who  had 
called  a  conference  in  the  face  of  a  threatened  strike, 
"that  we  really  earn  our  day's  pay  in  only  two  hours?"  Piez 
saw  that  the  man  was  sincere ;  that  he  expressed  the  thoughts  of 
many  workmen  when  he  suggested  that  the  profits  of  the  business 
were  equal  to  three  and  a  half  times  the  payroll.  Instead  of  shut- 
ting off  the  debate,  he  went  into  an  explanation  to  his  own  men  of 
the  expense  of  power,  heat  and  light,  maintenance,  repairs, 
planners  and  supervisors,  and  the  other  functions  involved  in  the 
making  and  selling  of  a  product.  He  got  down  to  actual  instances 
and  quoted  specific  figures.  The  strike  was  not  called. 

"The  men,"  said  President  Piez,  "expressed  themselves  as 
satisfied  and  stayed  at  work.  Perhaps  some  of  them  received  a 
larger  idea  of  our  burdens  and  a  smaller  idea  of  our  profits 
through  the  interview." 

The  strike  peril  is  one  of  the  emergencies  which  managers 
sometimes  must  face.  Human  nature  cannot  be  standardized  as 
can  tools  or  machine  speeds,  and  the  unexpected  must  sometimes 
be  expected  in  dealing  with  it. 

There  are  many  such  variables  in  factory  management  both 
within  and  without  the  plant.  The  vagaries  of  demand,  already 
discussed,  are  among  the  most  important.  Human  nature  within 
the  plant  is  another.  Certain  types  of  hazard  are  always  present 
— breakdowns,  accidents,  fires ;  and  outside  the  factory,  mine  dis- 
asters, crop  failures,  freight  tie-ups,  a  financial  crash,  a  Dayton 
flood,  an  Omaha  cyclone,  a  San  Francisco  earthquake,  a  Euro- 


EMERGENCIES  173 


pean  war.  The  effect  on  the  business  may  be  slight — an  inter- 
ruption of  a  few  hours,  days  or  at  the  most,  weeks.  Perhaps  a 
partial  shutdown  for  a  month  or  two  may  result ;  perhaps  total 
ruin  for  the  business.  In  the  loosely  managed  plant,  emergen- 
cies may  arise  which  are  merely  retribution  for  oversights  and 
mistakes.  Even  in  the  well  managed  business,  however,  there 
exist  these  elements  which  are  partially  or  totally  beyond  the  con- 
trol of  any  man.  No  matter  how  thoroughly  the  organization  is 
developed  or  how  carefully  the  standard  instructions  are  main- 
tained, these  conditions  cannot  be  standardized.  What  can  be 
done  in  addition  to  carrying  insurance  of  various  sorts,  however, 
is  to  establish  policies  and  standard  methods  of  guarding  against 
the  avoidable,  catching  the;  first  evidence  of  the  appearance  of 
those  tests  that  must  come  and  throwing  the  weight  of  manage- 
ment intelligently  against  them.  Dealing  with  such  situations, 
more  or  less  serious,  is  an  important  part  of  the  manager's 
work  (Figure  XXXV). 

GOOD  ORGANIZATION  AND  SOUND  POLICIES  FURNISH  INSURANCE 
AGAINST  MOST  EMERGENCIES  IN  BUSINESS 

l_J  OW  the  right  background  enables  the  business  to  brush  aside 
an  emergency  that  appears  serious  is  illustrated  by  the  ex- 
perience of  the  Link-Belt's  president.  That  the  threatened  strike 
did  not  materialize  was  due  to  the  fact  that  he  held  the  confidence 
of  his  men.  That  he  won  them  by  an  explanation  of  overhead, 
selling  expense  and  profits  merely  shows  how  he  was  able  to 
build  upon  that  confidence  and  the  square  dealing  on  which  it  in 
turn  rests. 

Such  management  short-circuits  many  emergencies.  The  East- 
man Kodak  Company,  evidently  in  realization  of  this  fact,  has 
organized  efficiency  clubs  among  its  men.  Here  the  accounts  of 
the  various  departments  are  studied  in  rotation  so  that  each 
group  gets  a  broader  view  of  the  whole  manufacturing  situation. 
Publicity  of  corporation  accounts  has  a  value  within  the  plant 
as  well  as  with  the  voting  and  investing  public. 

Many  emergencies  could  be  avoided,  had  sound  management 
previously  prevailed.  Buildings  designed  and  constructed 
strictly  in  accordance  with  the  principles  of  fire  protection  and 


174 MANAGEMENT   DECISIONS 

properly  equipped  to  fight  fire,  for  instance,  are  almost  immune 
not  only  against  fire,  but  also  against  most  so-called  "acts  of 
God."  Systematic  upkeep  and  timely  repair  of  equipment  and 
premises  are  the  best-known  insurance  against  premature  de- 
terioration and  machinery  tie-ups.  A  spare  unit  or  a  supple- 
mental source  greatly  reduce  the  risk  of  a  breakdown  in  power. 
Machinery  maintained  up  to  date,  correct  manufacturing  meth- 
ods, planned  and  scheduled  operation,  scientific  purchasing  and 
storekeeping,  trained  and  interested  workmen,  and  good  inspec- 
tion are  under  most  circumstances  a  positive  guaranty  of  prompt 
deliveries,  uniform  quality  and  mutually  satisfactory  prices. 
These  measures  coupled  with  a  cost  system  which  promptly  gives 
you  all  the  vital  facts,  are  likely  to  take  most  of  the  old-fashioned 
adventure  out  of  manufacturing,  including  the  red  figures  on  the 
balance  sheet. 

To  the  manager  who  now  faces  an  emergency  due  to  neglect  of 
these  points,  this  program  may  seem  ill-timed.  It  has  its  point, 
however,  in  the  advice  he  likes  to  give  his  men — " Don't  make  the 
same  mistake  twice" — reorganize  to  keep  clear  of  those  emer- 
gencies which  grow  out  of  loose  management,  and  through  the 
experience  of  other  managers,  standardize  your  method  of  con- 
sidering such  emergencies  as  come  in  spite  of  precautions. 

EVEN  IN  THE  UNAVOIDABLE  CRISIS,  A  BUSINESS  SOUNDLY  BUILT 
IS  OFTEN  LITTLE  HURT 

TN  unexpected  ways,  moreover,  a  record  of  good  management 
takes  the  sting  out  of  threatening  situations.  When  a  man 
high  among  the  executives  of  the  concern — perhaps  the  chief  him- 
self— loses  his  grip,  standard  instructions  will  absorb  most  of  the 
force  of  the  blow.  When  labor  troubles  are  in  the  air,  the  man- 
ager realizes,  as  at  no  other  time,  the  value  of  frank  and  open 
dealings  between  the  management  and  the  men.  Good  working 
conditions,  reasonable  hours,  fair  wages,  unrestricted  avenues 
of  advancement  and  broad  opportunity  to  share  in  the  profits, 
a  definite  policy  and  routine  for  adjusting  grievances  and  a  repu- 
tation for  unflagging  interest  in  the  welfare  of  the  men  have 
smoothed  away  emergencies  that  seemed  insurmountable. 
The  story  is  told  of  "Golden  Rule"  Jones,  who  though  best 


EMERGENCIES 


175 


FIGURE   XXXV:      Emergencies  are  apparently  the  last  thing  against  which  the  manager  can  pre- 
determine a  course  of  action.     Even  with  these  unexpected  and  uncontrollable  factors  in  business, 
however,  forethought  and  a  definite  policy  have  been  found  to  pay.    Sources  of  trouble  can  be  charted, 
and  the  manager  who  is  well  organized  can  go  to  meet  the  crisis 


176 MANAGEMENT  DECISIONS 

known  as  the  "perpetual"  mayor  of  Toledo,  was  also  a  manufac- 
turer of  note,  that  when  a  city-wide  strike  was  in  progress  a 
few  years  ago,  his  plant  was  the  only  one  not  affected.  Yet  Jones 
himself  had  been  dead  for  over  ten  years.  An  investigator 
inquired  of  a  labor  leader  why  Jones'  men  had  not  been  called 
out  with  the  rest.  "Well,"  was  the  answer,  "we  never  can 
forget  the  kind  of  man  he  was."  What  a  tribute  to  the  ability 
of  a  manager,  to  his  appreciation  of  the  human  factor,  that  ten 
years  after  his  death  his  influence  was  still  sufficient  to  protect 
his  business  against  a  strike,  and  a  city-wide  strike  at  that ! 

' '  In  my  opinion  the  chief  cause  of  hostility  and  bad  feeling  be- 
tween management  and  men,"  declared  a  Chicago  manufacturer 
recently,  "is  the  usual  lack  of  any  means  for  determining  what 
is  right  and  wrong.  The  lack,  I  mean,  of  a  common  code  or  dis- 
interested authority  whose  judgment  is  respected  by  both  sides. 
Disputes  once  settled,  even  if  one  side  loses,  are  seldom  the  cause 
of  trouble ;  it  is  unsettled  disputes  that  are  dangerous." 

In  his  own  plant,  the  principles  of  management  which  he  has 
tried  out  and  proved  efficacious  for  the  prevention  and  settlement 
of  disputes  are  these : 

(1)  A  labor  department  responsible  for  industrial  peace  and 
the  good  will  of  the  workmen ;  therefore,  of  necessity,  fully 
informed  as  to  their  sentiments  and  the  organizations,  and 
really  representing  their  interests  in  the  councils  of  the 
company. 

(2)  A  means  for  the  prompt  and  final  settlement  of  all  dis- 
putes. 

(3)  Care  to  maintain  conviction  in  the  minds  of  the  men  that 
the  management  is  fair  and  that  all  employee  interests  are 
safeguarded. 

(4)  Constant  instruction  of  the  leaders  and  workpeople  in  the 
principles  of  business  equity,  so  that  gradually  a  code  is 
being  evolved  acceptable  by  all  parties  interested,  and  serv- 
iceable as  a  basis  for  the  adjustment  of  all  difficulties. 

(5)  The  development  of  efficient  representation  of  all  the  men 
in  the  direction  of  the  plant. 

Standing  beside  the  ruins  of  his  plant  the  day  after  a  con- 
flagration, a  tile  manufacturer,  penniless  and  in  debt,  found  in 


EMERGENCIES  177 


the  good  will  of  his  men  a  road  to  renewed  success.  When  he 
had  gathered  his  men  about  him  and  explained  that  he  faced 
the  alternative  of  abandoning  the  enterprise,  forcing  them  to  sell 
their  homes  and  seeking  work  elsewhere;  or  of  borrowing  he 
knew  not  how  in  order  to  rebuild  the  plant  piecemeal,  they  sup- 
plied him  out  of  their  savings  with  the  capital  which  relieved  the 
emergency. 

Emergencies  that  spring  from  external  sources  apparently  do 
not  submit  themselves  even  thus  far  to  the  foresight  and  control 
of  the  manager.  The  well-managed  plant,  however,  is  often 
found,  as  if  by  chance,  standing  aside  from  the  path  of  the 
physical  or  economic  upheaval.  John  H.  Patterson  was  deemed 
especially  fortunate  because  the  National  Cash  Register  plant 
stood  on  a  hill  safely  above  the  Miami  River  during  the  1914 
flood.  Foresight  in  picking  a  factory  location,  however,  sug- 
gests high,  well-drained  land,  both  because  of  the  danger  of 
freshets  and  also  because  of  the  health  factor. 

So  in  such  catastrophes  as  the  Baltimore  fire  and  the  San  Fran- 
cisco earthquake  and  fire,  those  alone  who  in  building  had  care- 
fully heeded  the  experience  of  other  builders,  escaped  without 
serious  damage,  or  at  least  without  total  ruin.  Reinforced  con- 
crete buildings,  or  steel  frame,  fire-proofed  with  concrete,  when 
all  openings  are  properly  safeguarded  and  inflammable  materials 
are  eschewed  in  furnishing,  are  not  only  ample  insurance  against 
fire  outside  as  well  as  within,  but  have  also  resisted  most  ordi- 
nary seismic  shocks  and  wind  storms. 

GETTING  THROUGH  AN  EMERGENCY— THE  TEST 
OF  A  MANAGER'S  RESOURCEFULNESS 

"CWEN  in  the  best  managed"  enterprises,  however,  the  unex- 
pected will  still  happen  both  within  and  without.  Among 
the  danger  points  are  threatened  loss  of  authority,  labor  troubles, 
stoppage  of  materials  or  novel  flaws  in  their  composition,  and 
trade  and  financial  difficulties  due  to  unfavorable  conditions 
throughout  the  land. 

Proper  management  holds  such  emergencies  down  to  the  mini- 
mum. When  the  call  comes,  moreover,  the  manager,  through  his 
established  freedom  from  detail,  his  attention  to  his  own  effi- 


178 MANAGEMENT  DECISIONS 

ciency  and  his  clear-cut  methods  of  thinking  out  management 
problems  under  the  guiding  experience  of  other  managers,  is 
usually  in  a  dominating  position.  His  intuitions  are  quick  and 
his  confidence  above  worry.  However  vague  or  baffling  the  in- 
formation to  be  gained  may  at  first  seem,  at  length  he  finds  the 
key  to  the  difficulty.  The  loosely  organized  plant,  led  by  a  detail- 
ridden  manager,  lacks  confidence  in  the  leader,  the  organization 
and  the  end  it  serves.  Under  strong  leadership,  on  the  other 
hand,  the  organization  will  not  usually  suffer  as  deeply,  and  its 
recovery  will  quickly  follow. 

How  an  able  executive  brought  order  out  of  emergency  condi- 
tions which  had  long  been  growing  up  in  one  of  the  largest 
organizations  in  this  country  will  illustrate  many  of  these  points. 
An  ever-increasing  time-lag  in  getting  out  specifications  and 
drawings  had  brought  indescribable  congestion.  Correspondents 
were  clamoring  for  delivery  of  orders  and  production  clerks  for 
work  for  their  waiting  shop  sections.  Yet  the  engineering  sec- 
tion seemed  utterly  incapable  of  rising  to  the  occasion.  Split 
into  six  groups,  each  separately  supervised,  it  had  proved  its 
inefficiency.  Finally  the  management,  taking  the  bull  by  the 
horns,  had  consolidated  all  these  little  departments  into  a  single 
large  one  and  had  placed  at  its  head  the  most  capable  of  the 
six  former  chiefs. 

Thus  elevated  above  his  compeers,  the  new  manager  had 
plunged  into  the  task  of  reorganization  with  a  vigor  that  prom- 
ised well.  His  goal  was,  with  the  force  at  hand,  to  turn  out 
several  times  the  work  they  had  been  doing.  From  the  first  he 
had  firmly  believed  this  could  be  done  by  a  more  methodical 
arrangement  and  a  better  system.  Six  months  had  passed,  how- 
ever, and  now,  at  the  very  crest  of  the  company's  business,  he 
faced  a  flat  failure. 

He  had  perfected  the  union  of  the  several  departments,  elimi- 
nated quantities  of  red  tape  and  greatly  simplified  the  system ; 
yet  he  had  in  his  department  nineteen  hundred  orders  upon  which 
the  shop  was  waiting  for  information  before  it  could  proceed. 
This  was  three  times  the  number  he  should  have  had.  In  all 
the  history  of  the  establishment  there  had  never  been  such  a 
scandal,  and  the  chief  could  not  help  but  admire  the  stanchness 
of  the  management  that  had  stood  behind  him  so  long  in  the 


EMERGENCIES  179 


face  of  this  condition.  He  had  no  illusions,  however,  about  the 
length  of  time  his  chance  could  continue.  He  knew  that  a  month 
more  was  about  all  he  could  count  on.  It  was  up  to  him  to  move 
those  orders  and  move  them  quickly,  otherwise  there  would  soon 
be  a  new  face  at  his  desk. 

He  knew,  further,  where  the  trouble  was.  The  little  force  he 
had  brought  over  with  him  was  working  loyally  to  help  him  out 
of  the  hole.  But  the  rest  of  the  organization,  jealous  as  only 
men  in  a  big,  loosely  knit  company  can  be  of  a  success,  were 
chuckling  to  themselves  as  they  contemplated  the  impending 
failure  of  his  plans  for  reorganization.  These  were  the  men 
who  had  to  do  the  actual  work,  and  they  were  hoping  that  he 
could  not  bring  them  to  it.  The  product  of  years  of  selection, 
the  men  upon  whose  brains  the  company  was  absolutely  depend- 
ent for  its  designs,  he  could  not  cure  their  obstinacy  by  ordinary 
means.  Their  work,  moreover,  was  largely  creative — to  evolve 
plans  no  one  else  had  even  thought  of — and  it  was  impossible  to 
tell  in  a  given  case  whether  or  not  a  man  was  remiss  because  the 
necessary  bright  idea  did  not  strike  him  at  once. 

Yes,  it  was  out  of  the  question,  while  resistance  was  merely 
passive,  to  do  any  wholesale  firing.  Moreover,  so  to  have  done 
would  not  have  increased  the  chief's  popularity  with  the  rest 
and  would  have  meant  a  heavy  loss  to  the  company. 

Nor  were  threats  effective.  For  two  months  or  more  he  had 
indulged  in  them  freely,  without  avail.  The  trouble  was  not  in 
any  positive  disobedience  of  the  men,  but  merely  their  seeming 
inability  to  speed  up. 

HOW  AN  EXECUTIVE  INVENTED  NEW  FOLLOW-UP  METHODS 
TO  MEET  A  PRODUCTION  CRISIS 

/"\NCE  again  he  went  over  his  analysis  of  the  problem.    He  had 

three  classes  of  men  to  deal  with — engineers,  draftsmen  and 

clerks.    The  clerks  could  easily  be  dealt  with.    Their  work  was 

tangible — the  routine  part  of  handling  the  orders,  and  they  could 

be  replaced  on  short  notice.     The  work  of  the  draftsmen  was 

somewhat  similar  and  the  chief  felt  he  had  that  well  in  hand,  too. 

So  the  problem  was  narrowed  down  to  the  engineers. 

He  gave  deep  thought  to  the  matter.    He  had  observed  that 


180 MANAGEMENT  DECISIONS ^ 

whenever  he  was  especially  interested  in  an  order  and  personally 
followed  it  through,  he  got  fairly  quick  action.  Thereupon  was 
born  in  his  mind  the  idea  of  a  personal  follow-up  and  this  it  was 
that  finally  saved  him. 

Everything  depended  on  the  man  to  head  the  squad.  He  must 
have  zeal  and  persistence  without  limit,  and  have  the  aid  of 
others  who  were  also  "stickers."  He  finally  found  a  young 
fellow  full  of  the  spirit  of  reform,  who  readily  agreed  that  for 
an  engineering  department  to  have  nineteen  hundred  orders  on 
hand  was  a  burning  shame  and  a  situation  that  called  for  his 
instant  attention.  A  little  judicious  patting  on  the  back  and 
the  prospect  of  some  glory  started  him  on  the  jump.  With  a 
little  help,  he  picked  a  half  dozen  men  of  his  own  stripe  to  assist 
him,  and  the  reform  began. 

While  a  somewhat  formal  name  was  given  to  this  squad,  it  was 
never  any  other  to  the  force  at  large  than  the  "Pest  Division." 
Its  members  had  only  one  idea  and  that  was  to  get  out  the 
orders.  Excuses  did  not  interest  them,  and  as  they  had  no  pro- 
ductive functions  themselves,  recriminations  did  not  "go." 

Certain  machinery  was  devised  to  make  their  work  possible. 
All  orders  came  to  them  first  and  two  copies  were  provided  for 
their  special  use.  The  original  order  was  hustled  to  an  engineer 
before  it  was  hardly  dry.  He  was  required  to  sign  for  it  in  the 
messenger's  delivery  book.  These  books  upon  being  signed  were 
taken  at  once  to  a  clerk  who  operated  a  numerical  file  of  orders, 
using  one  of  the  special  copies.  To  whom  assigned  and  the  time 
of  delivery  were  posted  on  the  back.  Thereafter,  as  the  original 
order  moved  forward  from  station  to  station  within  the  depart- 
ment, always  by  messenger,  a  receipt  was  obtained  each  time  and 
the  record  immediately  transferred  to  the  back  of  the  correspond- 
ing file  copy.  Under  this  plan,  the  central  file  always  presented 
an  accurate  record  of  the  status  of  each  order,  which  was  never 
more  than  an  hour  behind  actual  deliveries. 

The  other  special  copy  of  the  order  was  put  in  the  hands  of 
the  member  of  the  follow-up  squad  who  was  actually  to  follow 
the  order  through  and  who  then  became  responsible  for  its 
prompt  movements.  Of  course,  it  was  recognized  that  instan- 
taneous action  was  impossible  on  every  order  and  that  there 
vould  be  many  delays.  But  the  follow-up  man  in  each  case 


Ill 


EMERGENCIES  183 


secured  a  promise  from  the  engineer  stating  the  length  of  time 
he  would  still  require,  and  on  the  strength  of  this,  he  made  his 
promise  to  the  shop  and  the  sales  department  The  promise  sheet 
also  told  approximately  what  new  parts  would  be  required,  so 
that  the  shop  could  arrange  for  such  new  patterns  and  tools  as 
would  be  needed.  A  copy  of  this  sheet  was  also  attached  to  the 
copy  of  the  order  in  the  chief's  possession,  so  that  he  knew 
exactly  what  was  expected  of  the  department.  Another  copy 
was  posted  in  the  numerical  file,  to  enable  the  man  in  charge 
to  follow  up  the  ' '  follow-up  men ' '  and  see  that  they  did  not  shirk 
their  work.  The  "Pest  Division"  thus  was  enabled  to  tell  any 
interested  party  at  any  moment  just  what  was  doing  on  a  certain 
order  and  why. 

These  promises  naturally  were  not  always  met,  but  the  moral 
effect  was  very  great  and  the  department  speedily  began  to  clear 
itself.  The  follow-up  men  were  encouraged  to  think  and  act  inde- 
pendently, and  they  made  it  their  business  to  anticipate  fall- 
downs  and  prevent  them  so  far  as  possible  by  calling  in  help 
before  they  occurred.  Failing,  they  at  once  told  all  interested 
parties  and  this  often  gave  the  salesmen  a  chance  to  soften  the 
blow  to  the  customer  and  usually  give  a  perfectly  good  excuse, 
for  avoidable  delays  soon  became  rare. 

Several  collateral  benefits  also  materialized.  One  of  these  was 
to  curb  preference  orders.  The  "Pest  Division"  soon  showed 
that  the  course  of  such  orders  was  strewn  with  delays  to  other 
work  and  accordingly  the  practice  of  issuing  them  shortly  fell 
into  strong  disfavor. 

Another  benefit  was  to  inculcate  higher  moral  standards  among 
the  shop  clerks.  Before  the  formation  of  the  new  division,  a 
clerk's  stock  excuse  for  the  non-delivery  of  anything  was  the  fail- 
ings of  the  engineers.  It  was  a  good  excuse,  because  nobody  was 
in  a  position  to  dispute  it.  The  follow-up  squad,  however,  got  at 
the  real  reasons  and  made  it  so  unpleasant  for  the  clerks  when- 
ever they  gave  the  old  excuse  wrongly,  that  they  finally  came  to 
avoid  its  use  entirely. 

A  third  benefit  appeared  in  the  setting  of  delivery  dates  by  the 
salesmen.  Under  the  old  conditions,  the  shop  "fell  down"  so 
regularly  that  the  salesmen  had  formed  the  habit  of  guessing  at 
delivery  dates,  with  some  very  absurd  results.  When  the  plan- 


184 MANAGEMENT   DECISIONS 

ning  department  began  to  run  on  a  schedule  based  on  reasonable 
efficiency,  the  shop  heads  found  that  they  in  turn  could  run  to 
schedule  and  keep  their  promises,  and  both  departments  now 
promptly  repudiated  any  dates  that  were  not  reasonable.  The 
salesmen  found  it  wise  to  study  the  matter  of  dates  and  ask  for 
delivery  estimates  before  they  promised  a  customer.  As  a  result, 
better  relations  were  established  all  around. 

A  reduction  in  the  number  of  orders  on  hand  in  a  few  weeks  to 
seven  hundred,  and  a  further  reduction  subsequently,  was  the 
direct  result  of  the  activities  of  the  follow-up  squad.  The  crest 
of  the  business  wave  that  swept  the  country  a  few  months  later 
found  the  organization  ready,  and  the  engineering  department 
passed  through  the  time  of  stress  without  the  slightest  trouble. 
The  special  division  organized  by  the  chief  to  meet  the  emergency 
was  gradually  reduced  in  size  as  the  engineers  became  accus- 
tomed to  working  at  higher  pressure,  until  at  the  present  time 
it  is  relatively  unimportant. 

In  such  matter-of-fact  ways  as  this,  the  resourceful  executive 
can  usually  devise  or  adapt  methods  which  conquer  the  imme- 
diate emergency.  And  having  done  so,  he  then  takes  steps  which 
in  a  measure  make  his  organization  proof  to  such  dangers  in  the 
future. 

EMERGENCIES,  THE  OPPORTUNITY  OF  THE  MANAGER 
WHOSE  ORGANIZATION  IS  STRONG  AND  SOUND 

rFHE  same  coolness,  ability  to  analyze,  to  throw  aside  tradi- 
tions, to  locate  the  sources  of  trouble  and  to  reconstruct  the 
situation  enable  resourceful  managers  to  make  the  best  of  emer- 
gencies which  are  absolutely  beyond  the  control  of  anyone. 

When  shipwreck  cut  off  a  six  months'  supply  of  Swedish  iron 
from  a  watch  factory,  the  purchasing  department  by  heroic  meas- 
ures developed  a  domestic  source  and  put  an  end  to  the  peril. 
When  monopoly  threatened  its  supply  of  a  special  oil,  the  same 
plant  dug  out  the  process  involved  in  making  the  oil  and  backed 
another  supplier  in  its  manufacture.  When  it  became  impossi- 
ble in  1914  to  secure  colors  from  Germany,  one  plant  which  had 
laid  a  plan  for  domestic  manufacture  on  a  small  scale  as  a  means 
of  steadying  the  foreign  market,  developed  the  process  to  such  a 


EMERGENCIES  185 


point  that,  even  on  a  strictly  competitive  basis,  its  automatic 
machinery  put  the  old  source  permanently  out  of  the  running. 

Emergencies  which  have  arisen  from  commercial  conditions, 
legal  complications  and  clashes  with  state  and  national  authori- 
ties have  similarly  given  way  before  managers  who  have  taken  a 
fresh  viewpoint  and  recognized  the  full  meaning  of  good  will.  It 
is  rare  even  for  widespread  financial  disturbances  seriously  to 
embarrass  the  most  astute  and  courageous  manufacturers.  The 
over-cautious  manufacturer,  always  ready  to  doubt  his  place  in 
business,  may  be  caught  without  necessary  supplies.  The  reckless 
and  improvident,  too  far  extended  financially,  also  have  reason 
for  uneasiness.  But  the  manager  with  his  organization  in  hand 
and  ready  to  fight  the  harder,  finds  financial  interests  as  well  as 
widespread  good  will  firmly  behind  him  and  frequently  makes 
capital  out  of  the  crisis. 

When  the  advertising  expenditures  of  other  firms  are  being 
curtailed,  these  executives  increase  the  activity  on  the  firing  line. 
By  so  doing  in  1914  a  St.  Louis  manufacturer  was  enabled  to 
close  the  year  with  the  best  showing  in  the  history  of  the  enter- 
prise. So,  too,  when  a  motor  truck  manufacturer  saw  his  com- 
petitors pushing  for  war  business,  he  perceived  his  chance  in  the 
neutral  foreign  market,  which  he  has  developed  in  a  permanent 
way. 

Just  as  the  manager  needs  good  organization  and  standards 
for  routine,  so  he  needs  a  broad  background  and  philosophy  with 
which  to  meet  emergencies.  If  he  knows  both  the  ' '  why ' '  and  the 
"how"  of  his  business  and  has  studied  the  experiences  of  other 
men  who  have  faced  emergencies,  few  situations  will  long  block 
his  progress. 


XII 

KEEPING  MANAGEMENT 
POLICIES  HEALTHY 


ENTERING  a  metalware  factory  in  Wisconsin,  an  industrial 
engineer  found  two  grades  of  product  regularly  being  put 
upon  the  market.  "Firsts"  were  sold  under  the  guaranty 
and  trade-mark  of  the  company.  "Seconds"  were  disposed  of 
anonymously.  It  was  a  settled  policy  so  far  as  possible  to  take 
care  of  the  waste  from  the  enameling  room  by  selling  as  seconds 
those  articles  which  failed  by  only  a  little  to  pass  inspection. 
Work  which  was  seriously  defective  of  course  was  culled. 

Under  this  arrangement  the  percentage  of  seconds  kept  climb- 
ing until  the  management  was  quite  ready  to  believe  the  en- 
gineer's statement  that  something  was  wrong. 

"And  the  thing  which  is  wrong  fundamentally  is  not  the 
methods  of  your  workmen,"  the  specialist  told  the  manager; 
"but  the  ideal  of  this  corporation.  You  have  laid  down  the 
policy  of  recognizing  seconds  and  of  marketing  work  on  which 
you  are  not  ready  to  place  your  brand.  Your  workmen  have 
naturally  accepted  this  policy  and  are  turning  out  work  of  the 
grade  your  requirements  define.  Tolerance  of  seconds  breeds 
seconds." 

Instructions  were  accordingly  drawn  up  that  hereafter  seconds 
should  be  scrapped.  Whatever  the  factory  sold,  it  was  to  brand 
and  stand  behind.  This  word  went  through  the  shop.  Detail 
policies  and  reforms  in  shop  methods  logically  followed.  Super- 
intendent, foremen  and  workmen  heard  the  call  of  quality  and 
responded.  Production  of  imperfect  articles  was  so  far  reduced 
that  a  definite  gain  in  net  profits  was  scored. 

A  business  policy  is  a  definite  course  or  method  adopted  by 


BUSINESS  POLICIES 187 

the  management  for  the  guidance  of  those  who  must  act  without 
reasoning  back  over  the  whole  ground — a  rule  to  secure  a  de- 
sired result  under  designated  conditions.  The  management  has 
a  certain  ideal — profits — which  it  wishes  to  realize.  It  recog- 
nizes certain  conditions  which  must  be  met,  and  a  certain  stand- 
ard— the  law  of  compensation  or  square  dealing,  without  which, 
most  managers  will  admit,  it  is  impossible  to  secure  permanent 
success.  In  order  that  everyone  in  the  company  may  have  a  rule 
of  procedure  which  will  keep  to  these  conditions  and  tend  toward 
this  ideal  constantly,  avoiding  the  mistakes  and  the  disregard 
of  principles  which  in  the  end  are  disastrous,  the  manager  lays 
down  his  policies.  These  recognize,  for  example,  that  in  dealing 
with  his  suppliers,  his  own  men,  his  customers,  his  competitors 
and  the  public,  to  get  something  for  nothing  is  impossible,  just 
as  to  give  something  for  nothing  drains  the  resources. 

In  the  loosely  managed  concern,  policies  are  not  defined  and 
the  executives  are  constantly  appealed  to  for  decisions  in  which 
they  interpret  the  manager's  wishes  as  best  they  can.  Once  these 
principles  are  actually  fixed,  however,  the  subordinate  can  apply 
them  and  determine  for  himself  what  to  do  in  any  routine  case. 
Rules,  for  example,  will  embody  the  ideals  of  the  management 
regarding  thoroughness  and  as  to  the  particular  field  in  which  it 
sees  its  opportunity.  Thus  will  be  determined  every  detail  of 
cost,  quality  and  service  relating  to  the  product. 

If  the  policy  is  for  a  low-grade  article  at  a  low  price  with 
modest  limits  of  service,  every  case  which  monies  up  will  be 
decided  in  such  a  way  as  to  avoid  by-paths  and  keep  straight 
for  the  economy  goal.  In  the  Ford  plant,  when  the  question  of 
taking  over  another  factory  for  the  production  of  high-priced 
cars  came  up,  Ford,  with  his  firm  grip  upon  the  policy  of  the 
company,  vetoed  the  plan,  although  it  had  won  support  among 
his  executives.  Suggestions  for  expensive  refinements  in  design 
and  attachments  have  time  and  again  been  rejected  by  the  appli- 
cation of  the  same  fundamental  policy.  Equally  sound  for  their 
purposes,  as  indicated  by  profits  and  prestige,  are  the  policies  of 
other  plants  making  cars  at  $1,000,  $1,500,  $2,500  and  $5,000. 
To  have  wavered  in  any  particular  case,  however,  would  have 
been  to  lose  the  advantage  of  standard  production  for  one  vein 
of  demand  and  to  put  the  concern  at  a  handicap  all  along  its 


188 MANAGEMENT  DECISIONS 

line,  wherever  its  products  met  standard  competition. 

Once  a  policy  is  in  force,  and  so  long  as  conditions  do  not 
change  materially,  the  task  of  the  management  is  constantly  to 
refine  toward  this  ideal  balance  of  cost,  quality  and  service — 
to  keep  the  indicator  steady  against  the  cross  currents. 

DETAIL  POLICIES  SHOULD  GROW  OUT  OF  THE  FUNDAMENTAL  BALANCE 
BETWEEN  COST  AND  QUALITY-SERVICE 

C~)UT  of  the  fundamental  policy  will  grow  the  detail  policies 
of  the  concern,  many  of  them  interpretations  of  the  basic 
policy  by  the  manager  of  production,  various  foremen  and  even 
individual  workmen.  Such  policies  will  cover  practically  every 
detail  in  the  business — building  construction  and  maintenance, 
machinery,  tools,  requisitions,  purchases,  stores,  wage  payment, 
welfare  work,  promotion,  training,  the  definition  of  responsi- 
bility, the  details  of  production,  cost  keeping  and  cost  control. 

A  policy  will  indicate  whether  the  company  and  its  head  are  to 
.  be  the  only  public  figures,  or  if  the  personality  of  individuals  is 
to  be  built  up  and  their  enthusiasm  stimulated  by  publicity  for 
their  personal  share  in  the  achievements  of  the  concern.  A  great 
corporation  has  recently  decided,  for  example,  that  in  dealing 
with  householders  over  a  wide  territory  what  it  needs  to  aug- 
ment its  good  will  is  personal  contact  between  each  branch  man- 
ager and  his  customers.  Another  policy  will  determine  whether 
buildings  and  equipment  are  to  be  of  the  most  permanent  type 
or  certain  makeshifts  accepted,  in  order  to  maintain  more  of  the 
capital  liquid.  If  a  new  product  is  to  be  put  on  the  market, 
policies  must  be  laid  down  determining  discounts  and  the  treat- 
ment of  dealers,  questions  of  brands  and  price  maintenance  and 
the  terms  on  which  competition  is  to  be  met.  If,  for  example, 
the  product  is  a  seventy-five  cent  box  of  soap,  is  it  to  be  made 
better  in  quality  and  of  the  same  size  as  competing  packages, 
is  it  to  be  made  in  three  bars  somewhat  larger,  or  four  bars  of 
equal  size? 

Such  policies,  rightly  incorporated  in  the  shop  instructions 
and  accepted  in  spirit  by  the  executives,  will,  as  has  been 
said,  be  followed  by  all  until  officially  revised.  Changes  will 
be  unnecessary  so  long  as  the  aims  of  the  management  and  the 


BUSINESS  POLICIES 


189 


conditions  under  which  the  policy  was  laid  down  remain  con- 
stant. 

But  few  conditions  are  constants.  Many  of  the  factors  in  busi- 
ness must  at  all  times  be  regarded  as  variables.  Policies,  there- 
fore, which  were  sound  and  wise  when  established,  soon  cease  to 
fit  conditions  and  the  times.  For  every  business  that  suffers 
because  of  a  too  progressive  spirit,  a  score  are  retarded  in  their 
development  because  of  adherence  to  policies  which  are  out  of 
date.  Set  up  by  the  founder,  perhaps  originally  the  basis  of  a 
signal  success,  such  policies  are  accepted  by  those  who  follow 


|  Attention  to  Welfare  and  Compensation 
j             Clean-cut  Responsibility 

Within 
"     the  Plant 

|     Permanent  and  Regular  Employment 

]         Efficient  Conditions  of  Work 

|       Freedom  of  Action  of  Employees 

{Knowledge  of  Costs 

What  Is 
Concerned 
in  Building  up 
Good  Will 

In 

~    the  Trade 

Fair  Prices  and  Practices 

Fairness 
Efficiency 
Contact 
Progressiveness 
Sustained  Policies 

Acquaintance  and  Associated  Action  in 
Matters  of  Welfare  for  the  Trade 

Among 
Customers 

i       Service  and  Value,  Branded  and 
Advertised 

and 
Prospects 

Attention  to  Complaints 

Anticipation  of  Wants  of  Your  Trade 

r                      Diligence 

With 
the  Public 

Fairness 

A  Will  to  Keep  Ahead  of  PuWlc 
Opinion  in  Reforms 

FIGURE    XXXVI:      External  relations  are  every  day  becoming  more  important  to  the  manager 

of  a  business.      Good  will,  in  its  full  meaning,  may  easily  be  a  true  measure  of  success.      A  basis  of 

fairness  and  good  will  within  the  plant,  among  competitors  and  with  the  public,  as  well  as  with 

your  customers,  is  a  vital  consideration  in  determining  the  future  of  every  factory 

him  in  the  management  as  sufficient  and  final.  Methods  are 
copied  long  after  the  reasons  for  them  are  forgotten.  "How 
did  we  do  last  year  ? "  is  still  the  question  when  everyone  has  for- 
gotten why  it  was  so  done. 


190  _  MANAGEMENT  DECISIONS  _ 

Policies,  like  price-lists,  need  revision.  They  should  not  be 
tampered  with  constantly,  but  may  wisely  be  scrutinized  period- 
ically and  corrected  on  occasion.  What  is  prudent  this  year,  may 
next  year  be  less  prudent;  the  year  after,  it  may  not  be  prudent 
at  all.  If  we  define  management  as  the  art  of  keeping  the  busi- 
ness in  nice  adjustment  to  conditions  and  purposes,  then  this 
matter  of  correcting  plant  policies  and  formulating  new  ones 
as  changing  conditions  bring  on  the  need,  is  a  task  of  far-sight- 
edness and  steadfastness  which  measures  an  executive's  states- 
manship. 

The  unexpected  —  the  emergency  —  stimulates  the  manager  to 
immediate  and  masterful  action.  The  correction  of  policies  is 
a  task  for  patience,  for  keen  analysis  of  the  most  elusive  and 
perplexing  evidence,  for  the  projection  of  courses  of  action  far 
into  the  future,  and  for  decisions  which  may  at  first  cut  deep  and 
tax  the  faith. 

COST,  SELLING  PRICE  AND  VOLUME—  THE  EQUATION  ON  WHICH  THE  LIFE 
OF  THE  BUSINESS  HANGS 


the  bicycle  gradually  went  out  of  fashion,  scores  of  fac- 
tories faced  a  fundamental  change  of  conditions.  Certain 
plants  with  faith  in  the  utility  of  the  bicycle  as  a  tool  turned  from 
the  pleasure  rider  to  the  workman  and  found  a  successful  field. 
Other  manufacturers  applied  power  to  the  bicycle  and  developed 
the  motorcycle.  Still  others  entered  the  automobile  business. 
And  now  policies  in  both  fields  are  again  the  occasion  of  anxious 
thought.  Competition  in  a  partially  satisfied  market,  applying 
standard  methods  which  bring  large  output  and  low  unit  cost, 
has  forced  the  manufacturer  either  to  emphasize  quality  and 
service  —  the  satisfaction  of  the  individual  tastes  of  comparatively 
few  customers  as  to  design,  size,  power  and  efficiency;  or  to  en- 
ter the  fiercely  contested  price  market.  And  price  for  the  season 
must  be  based  upon  an  output  and  volume  of  sales  so  tremendous 
that  it  can  only  be  hoped  for,  not  known,  till  near  the  close  of 
the  year. 

These  are  difficult  decisions.  The  life  of  the  business  is  in- 
volved. If  the  estimated  volume  of  orders  is  not  realized,  the  costs' 
in  some  cases  will  swallow  up  the  investment.  The  calculation 


BUSINESS   POLICIES 


191 


of  possible  sales  and  probable  cost,  the  determination  of  the 
guiding  policy  even  one  year  ahead,  is  no  less  difficult  a  task  for 
the  manager  than  that  of  keeping  level  this  nice  balance,  once  it 
has  been  safely  determined. 


How  to  Approach  a  Business  Problem 


Divide  the  Isolate  the         Get  the  Facts         Reconstruct 

Problem  Into  Perplexing          to  Clear  Up         the  Situation 

Its  Elements  Ones  These  Elements      on  a  Basis  of 


i  the 

Personal  Equation 
and  from  a  Fresh 
Viewpoint  with  a 
Right  Perspective 
Reach  a  Decision 


FIGURE  XXXVII:  When  a  business  problem  confronts  the  manager,  his  reasoning  too  often  is  in  a 
circle.  He  is  unable  to  get  a  grip  on  his  problem.  How  to  analyze  such  questions  is  here  indicated 
graphically.  The  first  step  is  to  divide  the  problem  into  its  elements;  the  next  to  isolate  the  most 
perplexing  ones.  After  analysis  come  investigation,  synthesis  and  the  fresh  point  of  view  which 
clears  up  all  uncertainty 

To  carry  out  such  analysis  and  determination  of  policies  and 
to  apply  tests  for  their  correction  from  time  to  time  may  in- 
volve months  or  years  of  study.  Data  must  be  accumulated, 
elaborate  shop  and  sales  studies  frequently  made  and,  most  im- 
portant of  all,  knowledge  gathered  on  the  deepest  social  tend- 
encies of  the  period. 

HOW  A  POLICY  OF  SAVING  THE  MEN  INCREASED  OUTPUT 
FOUR  AND  ONE-HALF  TIMES 

S~*  OMPENSATION  has  been  suggested  as  the  principle  on  which 
business  policies  may  well  rest.  The  policy  as  to  hours  of 
work  illustrates  its  application.  To  meet  competition  on  a  price 
basis,  managers  used  to  believe,  it  was  necessary  to  work  men  the 
maximum  number  of  hours.  Fourteen-hour  shifts  in  the  early 
days  were  by  no  means  uncommon  and  the  reduction  to  thirteen 
in  a  trade  where  fourteen  prevailed  was  naturally  looked  upon 


192 MANAGEMENT  DECISIONS 

as  suicidal.  Farm  hands  started  their  day  by  lamp  light  and 
closed  it  by  star  light — why  should  not  factory  workers  at  least 
use  the  sun  from  horizon  to  horizon  ? 

Logical  research  and  social  enlightenment,  however,  combined 
in  the  pressure  for  shorter  hours.  Work  was  divided  by  thinkers 
into  that  which  is  to  some  extent  recreative  and  that  which  is 
entirely  exhausting.  Modern  machinery  made  the  demands  of 
factory  work  more  than  ever  exacting.  Men  were  unable  to 
stand  the  continuous  strain  of  high  pressure  work;  and  losses 
in  sickness,  in  lagging,  and  in  accidents  pointed  to  something 
wrong  in  the  policies  of  the  management.  In  great  industrial  cen- 
ters, hours  had  to  be  shortened  because  of  the  distance'  the  work- 
men came  and  went. 

In  such  centers,  moreover,  labor,  finding  no  time  left  from  its 
work,  organized  for  a  shorter  day.  The  public  took  up  the  re- 
form and  granted  legislation  in  this  direction.  Such  legislation, 
manufacturers  as  a  rule  have  opposed  by  all  means  at  their  com- 
mand, because  they  felt  their  very  existence  to  be  threatened. 
Have  they  been  wise  in  fighting  for  the  long  hour?  Is  this  a 
policy  which  has  been  established  in  a  statesmanlike  way,  on  the 
sound  basis  of  analysis,  experience  and  experiment? 

Apparently,  to  pay  a  man  the  same  daily  wage  for  nine  hours 
as  for  ten  represents  a  cash  loss  of  ten  per  cent  of  the  payroll, 
which  may  well  neutralize  the  total  net  profits  of  the  enterprise. 
Self-preservation  dictates  vigorous  counter  measures  against  any 
internal  or  external  force  which  makes  such  demands  on  the 
factory. 

Years  of  experience,  however,  have  developed  the  futility  of 
combating  these  great  forces  external  to  a  business.  Even  when 
managers  join  hands  in  associations,  they  have  little  chance 
of  stemming  the  tide. 

Moreover,  those  managers  who  have  looked  deeper  and  have 
asked  not  "How  long  have  men  always  worked?"  but  "Under 
what  condition  can  men  maintain  greatest  output  ? ' '  have  found 
a  basis  of  experience  for  a  new  policy. 

Years  before  the  organized  movement  for  shorter  hours  got 
under  way,  the  superintendent  of  a  Youngstown  steel  mill,  a 
man  noted  for  his  keen  human  insight,  did  pioneer  work  upon  this 
question  of  policy.  He  came  to  the  conclusion  that  twelve  hour 


BUSINESS  POLICIES 


193 


r-iM* 
4-Hav.a 
L  Have  i 


Have  an  Employer's  Association  IB  Your  Urn 

Have  a  Company  Organization  for  AD  Execotivet  aoa  workmen 


-Regularize  Work  hi  You  Plant 

i  with  Other  Plants  01 


r- Regularize  nor 

L  Give  and  Take  \ 
-tesnr.stMdyWork-r       ^md*  Wort 

L  Favor  Government  Help  to  Solve  Mmam- 
Ing  Irregularity 

r-Avold  Binding  Agreements 

-uave  Labor  Mobile  1  eire  a  Surrender  Value  to  An  Profit  am) 
Welfare  Privileges 


•Make  Work 
Effective 


Better  Entering 


Find  the  Best  Way 
Sat  the  Best  Man  at  It 


•To  Produce  Mor* 
To  Waste  Less 

Know  How  the  Business  Stands 


-  Deduct  Running  Expenses 


r-Under  Fixed  Maximum  to  Those  Who 


-Pay  Salaries  and 

Wages 


-  With  Minimum  Wage  to  Workers 

-  Revise  Efficiency  Ratings  Quarterly 
Require  Better  Work  for  Higher  Pay 


-Set  Aside  Reserve,  up  to  a  Fixed  Maximum 


-Stock  Limited  to  Avoid  Watering 
.Maximum  Dividend  Fixed  on  Every  Class 
of  Security 


-Pro-rate  Perhaps  3-  of  Remaining  Revenue  by  Salaries  to 
Those  Who  Manage 

-  Contribute  Fixed  Sum  to  Cooperative  Association 

-Pro-rate  Remainder  or  Perhaps  f  of  Revenue  by  Wages  to 
Workers 


FIGURE  XXXVIII:  Puzzling  industrial  tendencies  suggest  a  revision  of  organization  policies  in 
three  directions,  as  here  suggested  by  Robert  G.  Valentine,  Chairman  of  the  First  Massachusetts 
Minjmum  Wage  Board:  (1)  that  capital  and  management  should  cease  to  profit  beyond  a  fixed 
maximum  on  which  the  workers  can  rely;  (2)  that  profit  sharing  should  supplement  wages;  (S) 
that  freedom  of  action  and  opportunity  are  essential  to  contest 


194 MANAGEMENT  DECISIONS 

shifts,  then  the  universal  custom,  in  this  industry  and  still  largely 
so,  were  unwise  both  from  a  human  and  an  economic  standpoint. 
With  nothing  but  his  own  conviction  to  guide  him,  he  called  his 
men  together  and  announced  his  new  policy.  Hereafter,  three 
shifts  of  eight  hours  each  would  be  the  rule.  Equipment — invest- 
ment— would  continue  to  work  twenty-four  hours  a  day.  In 
order  that  it  might  work  the  harder,  fresh  workmen  would  ' '  take 
it  on"  at  eight,  four  and  twelve.  Day  wages  would  remain  the 
same,  but  only  on  condition  that  output  was  maintained. 

The  first  few  weeks  the  men  fell  a  little  short  of  the  mark, 
but  before  long  they  began  to  show  increased  production.  And 
the  output  went  on  increasing  until  it  reached  the  remarkable 
total  of  sixty  thousand  pounds  in  eight  hours  as  against  forty 
thousand  in  the  former  day,  or  a  total  of  one  hundred  and 
eighty  thousand  in  twenty- four  hours  as  against  eighty  thousand 
— an  increase  of  one  hundred  and  twenty-five  per  cent. 

Here  was  a  manager  who  had  not  followed  precedents,  but  had 
interpreted  conditions.  Common  sense  told  him  that  a  man  has 
so  much  energy  to  put  into  his  work  and  so  much  recuperative 
power  every  hour  of  leisure.  Science  has  since  told  us  that 
fatigue  is  cumulative  and  that  double  fatigue  requires  more  than 
double  rest.  This  manager  saw,  however,  that  the  last  four 
hours,  day  after  day,  were  a  cumulative  drag  on  the  energies  of 
his  men.  "Was  it  not  worth  the  experiment  to  remove  this  fric- 
tion and  allow  his  men  to  put  the  time  into  recuperation?  He 
decided  that  it  was,  and  the  resulting  cost  figures  made  the 
changed  policy  as  to  length  of  hours  a  permanent  fixture. 

Other  manufacturers  have  independently  worked  out  the  same 
change  of  policy  and  given  the  present-day  manager  a  further 
basis  on  which  to  base  his  decision.  Some  of  these  instances  have 
been  discussed  elsewhere.  At  Granite  City  a  shortened  day  so 
reduced  waste  and  bad  work  due  to  negligence  and  fatigue  that 
this  item  alone  outweighed  the  twenty  per  cent  increase  in  the 
payroll.  In  the  House  of  Representatives  in  1911,  Mr.  Redfield, 
later  President  Wilson's  Secretary  of  Commerce,  told  how  a 
Brooklyn  manufacturer  of  his  acquaintance  had  become  satisfied 
that  the  last  hour  of  a  ten-hour  day  was  a  "tired  hour."  So 
he  lopped  it  off.  Wages  he  left  as  they  were.  At  the  end  of 


BUSINESS  POLICIES 


the  year,  he  found  his  costs  less  by  nearly  five  per  cent  than  in 
any  previous  year.  And,  meantime,  he  had  made  a  measurable 
increase  in  output. 

By  a  study  of  these  experiences  —  and  they  are  reinforced  by 
many  others  —  the  manager  learns  that  his  policy  as  to  hours  of 
work  involves  an  element  more  complex  than  the  simple  relation 
of  time  to  output.  With  the  man,  as  with  the  machine,  not  time 
merely,  but  speed,  power  and  friction  in  operation  must  be  con- 
sidered. And  beyond  these  are  endurance  and  psychological 
factors. 

Far-sighted  managers  are  more  and  more  scrutinizing  their 
relations  with  society  and  of  their  own  accord  are  declaring 
their  independence  of  tradition  in  the  correction  of  management 
policies.  Instead  of  jumping  to  conclusions  on  a  basis  of  ap- 
parent labor  costs,  for  example,  they  are  looking  deeper  and 
considering  the  cost  of  dissatisfaction,  recuperation,  ill  will,  in- 
subordination and  a  high  rate  of  labor  turnover.  To  make  the 
most  effective  use  of  each  hour  and  each  man  in  the  long  run 
is  the  new  criterion. 

A  manager  may  go  with  the  current  and  be  recognized  as  a 
leader,  enjoying  the  good  will  of  his  men  and  the  community; 
or  he  may  be  carried  on,  resisting  and  disliked.  "To  be  ahead 
of  both  the  law  and  the  union  standard  of  hours,  '  '  is  the  definite 
policy  in  the  Cleveland  plant  of  which  Richard  A.  Feiss  is  the 
general  manager  ;  '  '  Our  organization  is  keyed  up  to  a  high  pitch 
and  we  shouldn't  be  able  to  maintain  our  level  if  we  tolerated 
any  condition  that  undermined  our  people's  effectiveness.  We 
systematically  investigate  the  causes  of  inefficiency,  and  if  we 
find  the  length  of  the  working  day  responsible  in  part,  we  do  not 
hesitate  to  shorten  it.  Our  hours  are  now  less  than  the  maximum 
prescribed  by  the  state  for  women,  and  we  intend  shortly  to 
reduce  them  still  further." 

Such  a  policy  not  only  falls  in  line  with  natural  forces  and 
principles  of  efficiency,  but  also  gives  the  workpeople  a  feeling 
that  they  are  employed  where  standards  of  hours  and  pay  are 
voluntarily  maintained  inferior  to  none.  Mutual  respect,  co- 
operation and  good  will  are  the  natural  result,  whereas  the  entire 
community  would  discount  any  concession  obviously  forced  from 
the  management. 


196 MANAGEMENT  DECISIONS 

How  an  enlightened  labor  policy  dominates  an  entire  plant 
and  how  far  it  has  been  wise  may  be  seen  also  in  the  experience 
of  another  plant.  The  instance  is  taken  from  the  enameling 
industry.  Abroad  and  very  generally  in  this  country  until 
recently,  as  in  the  steel  industry,  continuous  operation  and 
two  twelve-hour  shifts  under  somewhat  rigorous  conditions  have 
prevailed.  In  this  plant,  however,  the  two-tour  plan  many  years 
ago  gave  way  to  the  three-tour  one.  Wages  were  not  decreased. 
Instead,  it  is  now  by  no  means  uncommon  for  an  enameler  to 
receive  from  seventy-five  to  ninety  dollars  for  a  month's  work. 
Output  meanwhile  has  gone  up  and  costs  down.  The  result  is 
reduced  friction  of  every  sort  and  the  concentration  of  the  force 
upon  actual  production. 

In  the  day  of  twelve  hours,  eight  to  ten  bath  tubs  were  the 
normal  production  for  a  pair  of  men.  Twice  that  number  are 
now  produced  in  eight  hours  and  the  men  have  fully  one-third 
of  this  time  to  rest.  Further  improvements  in  equipment  are 
being  worked  out,  which,  it  has  already  been  demonstrated,  will 
enable  the  same  men  to  enamel  twenty-four  to  thirty  tubs  in 
eight  hours.  But  they  will  be  kept  busy  so  constantly  that  it  is 
doubtful  whether  they  can  stand  the  strain.  So  the  policy  will 
be  further  to  shorten  the  shifts.  With  a  six-hour  turn,  it  is  ex- 
pected that  four  tubs  an  hour  will  prove  a  reasonable  standard. 
Meantime,  it  has  been  the  principle  of  the  management  constantly 
to  push  ahead  in  the  care  of  its  men.  Formerly,  the  intense  heat 
the  men  had  to  face  and  the  dust-laden  air  combined  to  lower 
their  vitality  and  require  frequent  rest  periods.  Heat  curtains 
have  now  been  built  in  front  of  the  furnaces,  a  forced  ventilation 
system  provided  and  hoods  connected  with  the  exhaust  placed 
over  the  enameling  cradles.  The  improvement  in  the  men's 
efficiency  has  been  very  decided. 

The  results  of  this  management's  well-rounded  labor  policy 
have  been  to  increase  output,  decrease  costs,  shorten  the  hours 
of  labor,  raise  wages  and  promote  both  the  health  and  content- 
ment of  its  men.  Beyond  question,  it  has  laid  its  course  by  sound 
principles  of  efficiency,  rather  than  precedent  and  superficial 
reasoning. 

Every  policy  needs  to  be  brought  under  this  broad  test. 
The  question  is  not  whether  the  method  has  been  profitable  in  the 


BUSINESS  POLICIES 197 

past  nor  yet  that  it  seems  to  be  fruitful  at  present,  but  is  it  in 
harmony  with  the  principles  of  permanent  efficiency  and  the 
spirit  of  the  times?  Will  it  in  the  long  run  mean  progress ?  As 
new  issues  come  up,  let  the  manager  not  refuse  to  entertain 
them  simply  because  they  are  new  or  because  a  change  of  policy 
involves  work  and  expenditure.  Rather  let  him  receive  each 
suggestion  with  an  open  mind,  subject  it  to  a  thorough  analysis, 
and  if  in  his  judgment  it  is  sound  and  wise,0adopt  or  adapt  it 
until  the  new  policy  stands  or  falls  by  results. 

DEVELOPING  A  HEALTHY  SPIRIT  OF  CRITICISM  AND  IMPROVEMENT 
AS  A  MEANS  TO  SUSTAINED  PROGRESS 

Q  NE  manager  has  instituted  the  plan  of  subjecting  his  policies 
and  methods  to  a  rigorous  cross-examination  once  a  year.  In 
the  light  of  profit-and-loss  iigures,  balanced  by  his  perspective, 
the  unproductive  is  cut  away,  measures  that  have  been  profitable 
are  given  more  power,  rulings  are  corrected,  fresh  ideas  launched 
and  the  new  course  laid. 

Here  is  a  simple,  deliberately-planned  master  policy  govern- 
ing all  policies.  Put  into  practice  by  the  heads  of  any  business, 
it  serves  a  double  purpose.  It  finds  the  leaks  and  stops  them ;  it 
gives  headway  to  the  policies  that  promise  profits.  Most  busi- 
nesses on  the  other  hand  find  the  leak  by  chance  and  scramble  to 
stop  the  loss  by  whatever  emergency  measures  are  necessary. 
What  is  needed,  however,  is  a  steady  lookout — a  fixed  policy  of 
checking  up  policies,  methods  and  results,  not  merely  with  re- 
spect to  trade,  but  in  all  the  relations  within  a  business  and 
between  the  business  and  its  community,  its  associations,  organ- 
ized labor  and  the  public. 

Too  frequent  changes  make  the  whole  course  of  the  business 
wavering  and  uncertain ;  but  no  set  of  business  rules  is  complete 
which  allows  no  place  and  provides  no  machinery  for  reconstruc- 
tion and  amendment. 

James  Hartness,  of  the  Jones  and  Lamson  Machine  Company, 
in  his  valedictory  address  as  President  of  the  American  Society 
of  Mechanical  Engineers  in  January,  1915,  recommended  that 
industrial  organizations  have  annually,  in  addition  to  a  treas- 
urer's or  financial  report,  a  human  report. 


198 MANAGEMENT  DECISIONS 

This  review  would  begin  with  the  directors  and  go  through 
the  entire  organization.  It  would  include  a  statement  relative 
to  the  elements  making  for  harmony  in  the  institution;  of  the 
length  of  service  of  manager  and  workmen;  the  frequency  of 
change  in  methods  or  articles  manufactured ;  the  intelligence  of 
the  executives  manifested  in  the  management  of  the  men;  the 
degree  of  contentment  of  each  member;  the  extent  to  which  each 
man  in  the  organization  approaches  the  best  position  for  which 
he  is  endowed  and  how  nearly  he  obtains  the  best  remuneration 
for  which  he  is  qualified;  the  extent  to  which  the  management 
recognizes  the  inertia  of  habit  of  both  mind  and  body ;  the  degree 
in  which  the  various  men  in  the  organization  approximate  their 
highest  efficiency;  the  extent  to  which  the  management  goes  in 
expression  of  appreciation;  the  degree  of  its  knowledge  of  the 
most  important  characteristics  of  a  man  as  indicated  by  his  inner 
motives  and  desires,  and  the  condition  of  his  mind  as  he  goes  to 
his  home  at  night. 

"All  these  elements,"  said  Mr.  Hartness,  "should  be  carefully 
appraised,  and  the  average  should  be  the  rating  of  the  company. 
The  investor  who  considers  this  human  rating,  together  with 
the  treasurer's  statement,  will  seldom  make  a  mistake  in  esti- 
mating the  true  worth  of  an  industrial  organization. 

"May  we  not  hope  that  the  tabulation  of  these  various  ele- 
ments taken  from  a  variety  of  industries  will  lead  in  establishing 
a  standard  that  will  be  a  guide  to  both  the  manager  and  the 
investor? 

"Surely  the  investor  should  look  with  distrust  upon  a  man- 
agement that  is  always  changing  officers,  changing  men,  changing 
models,  changing  methods,  without  regard  to  the  inertia  of  habit 
and  the  human  element  which  is  the  life-blood  of  every  organiza- 
tion. He  should  also  look  with  doubt  on  any  scheme  of  manage- 
ment which  tolerates  the  careless  employment  and  discharge  of 
men  without  due  regard  to  the  loss  involved  by  such  changes, 
for  the  perpetual  changing  of  men  is  equivalent  to  changing  the 
character  of  the  work  itself  in  its  handicap  to  industrial 
efficiency." 

The  business  that  is  willing  to  submit  itself  regularly  to  such 
an  analysis  as  this  and  can  show  a  creditable  report  as  to  care 


How  Edison  met  a  gigantic  business  crisis  is  indicated  (above)  in  the  wreckage  of  the  brick  and  steer 

buildings  from  the  fire  of  December  9,  1914,  and  the  badly  riddled   concrete   buildings;   and  (below) 

a  new  building  completed  in  seven  days,  of  wooden  frame  and  corrugated  iron  fireproofing,  in  line 

with  Edison's  idea  of  placing  inflammable  materials  in  inexpensive  buildings 


Usually  the  man  fin  lilv  responsible  for  production  also  shares  the  responsibility  for  sales.    A  corner 
in  the  office  of  one  such  manager  is  shown  below,  with  the  attendant  busy  tracing  the  location  and 
record*  of  the  salesmen.      To  meet  the  emergency  of  summer  business  in  war  time,  an  office  appli- 
ance manufacturer  developed  the  new  hand  machine  shown  above 


BUSINESS  POLICIES 201 

of  not  only  investment  and  dividends,  but  also  plant  and  equip- 
ment, men,  materials  and  methods,  has  reached  the  stage  of  true 
progress.  It  has  found  its  line  of  profit  and  is  hewing  to  it 
closely.  Going  neither  too  fast  nor  too  slow,  it  presents  a  spec- 
tacle of  coordinated  efficiency  which  should  be  the  goal  of  every 
business  house.  That  numerous  organizations  today  are  reaching 
this  stage  is  proof  positive  of  the  awakened  conscience  of  the  age, 
the  new  spirit  abroad  in  the  field  of  enterprise. 

The  day  of  simple  and  unconscious  following  of  tradition  in 
business  is  passing.  The  era  of  self-consciousness,  as  A.  Hamilton 
Church  has  called  it,  is  at  hand,  in  which  the  tendency  is  to  sub- 
ject every  habit  and  motive  to  severe  scrutiny,  to  examine  afresh 
every  item  of  daily  practice.  It  is,  in  some  ways,  a  painful  stage 
to  have  arrived  at.  Most  of  us,  as  Mr.  Church  suggests,  are  so 
content  with  our  natural  innocence  that  we  do  not  like  to  part 
with  it;  but  the  process  once  commenced  must  continue  to  the 
point  of  conscious  and  critical  efficiency. 

"As  a  consequence  of  this  newly-awakened  self-consciousness, 
managers  are  beginning  to  recognize,"  says  Mr.  Church,  "that 
production  is  an  aggregate  of  infinitesimal  separate  acts,  in  each 
of  which  there  are  three  main  components.  First,  experience 
must  be  drawn  on  fully;  secondly,  the  resulting  effort  must  be 
intelligently  adapted  to  the  end  in  view ;  and  thirdly,  this  effort 
must  become  habitual.  And  to  secure  the  successful  perform- 
ance of  these  acts  the  living  forces  concerned  must  be  maintained 
in  the  pink  of  condition,  both  mental  and  physical."  So  then, 
"the  examination  into  new  methods  of  remunerating  labor,  the 
adoption,  with  caution,  of  searching  instruments  of  analysis 
such  as  time  study,  the  use  of  precise  methods  of  accounting — 
these  are  not  causes  but  rather  consequences  of  the  new  spirit 
abroad." 

This  spirit,  moreover,  is  no  less  critical  of  policies  as  to  ma- 
terials, methods,  machines  and  men,  the  design  and  marketing 
of  the  product,  and  the  relations  of  the  organization  to  the  out- 
side world,  economic,  social  and  political,  than  it  is  of  minor 
details.  Everything  must  be  done  in  order  by  the  best  known 
standard,  but  with  care  at  all  times  and  under  all  circumstances 
to  be  thorough  and  fair. 


202 MANAGEMENT  DECISIONS 

Successful  policies  cannot  be  founded  upon  infirmity  of  pur- 
pose, uncertainty  in  essentials  or  laxity  in  control.  To  observe 
clearly,  to  study  deeply,  to  change  promptly  when  your  pur- 
poses and  circumstances  so  dictate,  and  always  to  have  a  steady- 
ing eye  and  hand  upon  the  main  policies  of  the  concern  is  the 
true  work  of  management. 


INDEX 


Administration,  systems  of  21 

Advertisements,  for  determining  demand  155 
American   Telephone   and   Telegraph 

Company  10 


Binders,  for  instructions  115 

Business  problems,  ways  of  approach         191 
By-products,  marketing  158 


Capital,  in  stock  18 
Capitalization,  in  relation  to  volume  of 

output  166 
Church,  A.  Hamilton  124 
Class  distinctions,  avoidance  of  93 
Code  of  factory  practice,  method  of  pre- 
paring 88 
Complaints,  organizing  data  on  156 
Corporation  schools  62 
COSTS 

— first  cost  and  final  cost  18 

— in  relation  to  management  14 

Cost  systems,  functions  of  22 


—colors  for  106 

—design  of  106 
— economy  of  space  and  time          103,  105 

— employment  blanks  101 

— essential  points  in  designing  06 

— for  inventories  98 
— inspection  blanks 

— preparation  of  102 

— production  orders  101 

— proper  supply  of  111 

— purchasing  and  storekeeping  98 

— repair  order  blanks  102 
— receipts 

— requisition  blanks 

— routing  tickets  100 

—size  of  103 

—space  utilization  107 

— standard  98 

—stock  used  105 

—type  108 

—wording  of  108 

— work  cards  101 

Franklin  Automobile  Company  10,  80 

Fredericks,  J.  George  124 

unctional  foremenship  72 
Functional  organization                     30,  32.  40 


pos 
EXE 


Decentralization,  of  factory  22 

DEMAND  149 

— use  of  advertisement  for  estimating  155 

— testing  in  average  towns  151 

Dennison  Manufacturing  Company  124 


EFFICIENCY 

— essential  points  142 

—requisites  for  health  143 

Eight-hour  day,  advantages  104 
Emergencjes,     follow-up     methods     for 

prevention  of  175,  170 

Emerson,  Harrington  84 
Engineers,  for  promotion   to  executive 

'tions  52 
ECUTIVES 

— -fitness  of  trained  engineers  52 

— meetings  of  61 

— qualities  requisite  in  51 

—selection  of  48,  50 

—training  of  49,  62 

— what  constitutes  ability  in  50 


Fashions  155 

Feiker.  F.  M.  10 

Folders,  for  instructions  117 
FOREMEN 

— choosing  from  outside  53 

— functional  72 
—necessity  for  leadership  ability  in          54 
FORMS 

— automatic  follow-up  of  119 

— charting  business  activities  97 

— complete  scheme  for  99 


Good  will,  how  to  build  up 
Graphs,  examples  of  use 


189 

186,  167 


Harris,  Ford  W.  124 
Hartness,  James 

Health,  requisites  for  143 

Hotpoint  Electric  Heating  Company  80 

I 

INSTRUCTIONS 

— avoidance  of  class  distinctions  93 

—binder  for  115 

— examples  of  41 

—folders  for  117 

— how  to  avoid  antagonizing  workmen  03 

—how  to  issue                                 .   80,  113 
— importance   of   putting   in    written 

form  86 

— in  selecting  and  training  new  men  116 

—model  form  bar  04 

—special  114 

-style  OS 

—subdivision  of  04 

—verbal                                                82,  121 


Joseph  ft  FeiM 


— adaptability 
— advantages 


INDEX 


—importance  of                                         35 

Policies,  need  for  occasional  revision         190 

—plan  of                                                          29 
Link-Belt  Company                                       124 
Lodge  and  Shipley  Company                         80 

Porter,  Harry  Franklin                    10,  80,  124 
Production  analysis                                         15 
Profits,  principles  involved                            11 

M 

Promotions,  encouraging  hope  of                  63 
Pyramid  form  of  organization                       44 

MACHINES 

Q 

—effect  upon  wages                                     18 

QUALITY 

—  investment  in                                            16 

MANAGEMENT 
—  detection  of  movements  in  demand 

—  in  relation  to  economy                            14 

149,  154 

—  duties  of                                                   140 

—  finding  the  grade  of  product  that 

Reorganization                                                 83 

pays                                                   161 
—  fitting  the  factory  to  the  trade              157 
—  how  failures  are  avoided                       151 

Retrenchment                                                136 
Retrenchment,  standardization  of               135 
Richardson,  J.  R.                                            80 

—in  emergencies                                        172 

Routine,  standardization  of                           23 

—  in  relation  to  fashions                           155 

Routing,  of  salesmen                                     128 

—marketing  of  by-products                     168 
—  need  for  fundamental  policy                188 
—policy  toward  maintenance                  131 

Rowan  wage  plan                                          110 
RULES                                                           110 
—  code  of                                                          84 

—readjustments  to  new  demands            156 

—  enforcement  of                                       119 

—scientific  methods  of                                27 
—  standardizing  retrenchment                 135 

Ryerson,  Joseph  T.,  and  Son                         80 

—test  stores                                                   155 

§ 

MANAGERS 

—  business  activities  controlled  by            13 
—  how  to  supplement  abilities                   27 
—problems  of                                               12 
—  should  keep  in  touch  with  employees  147 
—  standardization  of  duties                      142 
Manufacturing  interval,  in  determining 

Schools,  for  employees                                    08 
SCIENTIFIC    MANAGEMENT    (See 
also,  Taylor  system) 
—  division  of  functions 
—  essential  points                                         28 
—  reorganization  scheme                             07 
—  when  advisable                                           35 

TVT     lc  t'          f  h           A     f                               iKft 

Seconds,  policy  in  regard  to                         180 

TWFPTT'Vi'^   Dy-prouucts 

Seniority,  as  basis  for  advancement             53 

—  f  f   rptripn                                                          fll 

Shaw,  A.  W.                                                     10 

—of  shop  executives                                    59 
Minimum  stock                                                49 
Murphy,  Carroll  D.                                10,  124 

Size  of  plant,  in  relation  to  efficiency           22 
Superinspection                                              126 
Supervision,  outside                                         130 

T 

National  Cash  Register  Company     10,  124 
National   Cash  Register  Company,  or- 
ganization                                                    44 

Tags,  materials  for                                      104 
Taylor,  Frederick                                      28,  36 
Taylor,  Frederick  W.                              10.  124 
TAYLOR  SYSTEM 

0 

—bonus  plan 
—cost  of                                                        66 

ORGANIZATION 
—  a  general  plan  of                                        47 

—  efficiency  payment 
—  experiments  in  one  department             68 

—-classes  of                                                    80 

—investigations 

—  main  features  of 

—  complete  plan  for  factory                 42,  43 
—  division  ol  business  activities                 41 
—  essential  points                                         28 
—for  betterment                                         82 

—  order  board  for 
—requisites  for  success  of 
—  route  charts  for 
—  stores  ledger 

—  functional  plan                                  30,  32 
—  how  to  maintain  momentum  in           138 
—how  to  perfect                                        193 
—legislative  scheme                                    46 
—  line  and  staff                                      80,  32 
—  making  plan  fit  conditions                     41 
—  standardization  of                                     86 

—stores  system 
—task  plan                                                   76 
—  time  study                                          75,  76 
Thompson,  C.  Bertrand 
Trade    associations,    educational    cam- 

TR'AD'E  "CONDITIONS 

—  subdivision  of                                           30 
—Taylor  system                                          36 
—  the  human  nature  factor                        25 
—the  manager's  place  in  scheme              26 

—analysis  of                                               182 
—  charting  of 
Trade  ideas,  development  of                        153 
Trade  literature,  use  of 

—  unit  system                                               45 
Output,  in  relation  to  capitalization          166 

u 

P 

Periodicals                                                        61 

Union  Pacific  Railroad  Company                 10 
Unit  system,  of  organization                          45 
University  of  Cincinnati                                 10 

Personality,  in  management                          26 
Planning  boards,  illustrations  of             91,  92 

W 

Planning,  under  Taylor  system                     41 

Western  Electric  Company                          BO 

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